A seven-page RBI note submitted on December 22 to the Parliament's Department Related Committee of Finance headed by Congress leader M Veerappa Moily said "Government, on 7th November 2016, advised the Reserve Bank that to mitigate the triple problems of counterfeiting, terrorist financing, and black money, the Central Board of the Reserve Bank may consider withdrawal of the legal tender status of the notes in high denominations of Rs 500 and Rs 1,000."
While government's demonetization critics may use this to suggest that it was the government that advised the RBI to demonetize the currency notes of Rs 500 and 1000 and not vice versa, the reality is that in the given situation the government had a few options in view of widespread reports of the usage of Fake Indian Currency Notes (FICN) for financing of terrorism and drug financing.
"The FICN have their origin in a neighbouring country and pose a grievous threat to the security and integrity of the country. Hence the Government has recommended that the withdrawal of the legal tender character of these notes is apposite. GoI advised the Bank to place these matters of immediacy before the Directors of the Central Board of the Reserve Bank of India for consideration…" the note said.
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By IndianMandarins - 2017-01-10 10:10:09
A seven-page RBI note submitted on December 22 to the Parliament's Department Related Committee of Finance headed by Congress leader M Veerappa Moily said "Government, on 7th November 2016, advised the Reserve Bank that to mitigate the triple problems of counterfeiting, terrorist financing, and black money, the Central Board of the Reserve Bank may consider withdrawal of the legal tender status of the notes in high denominations of Rs 500 and Rs 1,000."
While government's demonetization critics may use this to suggest that it was the government that advised the RBI to demonetize the currency notes of Rs 500 and 1000 and not vice versa, the reality is that in the given situation the government had a few options in view of widespread reports of the usage of Fake Indian Currency Notes (FICN) for financing of terrorism and drug financing.
"The FICN have their origin in a neighbouring country and pose a grievous threat to the security and integrity of the country. Hence the Government has recommended that the withdrawal of the legal tender character of these notes is apposite. GoI advised the Bank to place these matters of immediacy before the Directors of the Central Board of the Reserve Bank of India for consideration…" the note said.
