Withdrawal of Rs 2000 Notes to Help Curb Black Money: Former RBI Deputy Governor

NEWS WAVE INDIA: Former Reserve Bank Deputy Governor R Gandhi said on Friday that the withdrawal of Rs 2000 notes will help in curbing black money to a “great extent” because people are hoarding the high value currency.

Gandhi, who was leading the currency department during the demonetisation of 2016, told PTI that any systemic impact on payments is unlikely because the notes are not used in day-to-day payments, which mostly go through in a digital manner.

However, the Rs 20,000 limit on a single exchange transaction — where those having the Rs 2000 notes can go to a bank branch for exchanging the currency with bills of other denominations –- may lead to “operational inconvenience” as some people may have to do multiple visits to a bank branch.

“The withdrawal of Rs 2000 notes will help in curbing black money to a great extent because people are hoarding the high value currency,” Gandhi said. “The notes are not used in day-to-day payments, which mostly go through in a digital manner. This means that people who have hoarded Rs 2000 notes will have to deposit them in banks or exchange them for other denominations. This will make it difficult for them to keep their black money hidden.”

Gandhi also said that the Rs 20,000 limit on a single exchange transaction may lead to some operational inconvenience, but it is a necessary measure to prevent people from exchanging large amounts of black money in a single go.

“The RBI has said that it will allow people to exchange the notes over a period of time, so this inconvenience should be temporary,” Gandhi said. “Overall, the withdrawal of Rs 2000 notes is a positive step in the fight against black money.”