NEW DELHI: Demonetisation of the Rs 500 and Rs 1,000 currency notes was an ‘advice’ given by the Central Government that the Reserve Bank of India followed, despite the short notice of less than 24 hours. This was communicated to Parliament’s Committee of Finance, headed by Congress leader M Veerappa Moily, by the central bank through a seven-page note. In its submission, the RBI also clarifies it had been working on the introduction of a new series of banknotes, with improved security features to prevent counterfeiting, over the last few years.
“Though no firm decision was taken initially, whether to demonetise or not, preparations still went on for introduction of new series notes, as that was needed in any case,” the report said. The report puts to rest the confusion created by statements from both within and outside the government that demonetisation was suggested by the central bank and implemented by the government. The RBI highlights that it was prepared with the introduction of Rs 2,000 notes to tackle the problem of fake currency in the market and demonetisation coincided with it.
However, despite all the caution exercised to maintain the shock-value of the move, a big chunk of black money has found its way back into the system, feel analysts. “Perhaps there was a leakage in the banking system or banks were ill-equipped to track the black money that has sneaked back into the system. The RBI needs to seriously work with the IT department and other agencies to pull out this black money,” says senior economist Vijay Sardana.
Backing this opinion, statistics released by the government on Tuesday estimate nearly Rs 3-4 trillion tax-evaded money to have flown back into the banking system in the 50-day window post-demonetisation. The Income Tax department is scrutinising the accounts — in more than 60 banks — that had received deposits of more than Rs 2 lakh since November 8, which is estimated to be about Rs 7.34 trillion. More than Rs 10,700 crore cash deposited in different accounts in the North-eastern states since November 9 and over Rs 16,000 crore deposited in different accounts of cooperative banks are under the IT department’s lens.
The department is also examining the Rs 25,000 crore cash deposited in dormant bank accounts and more than Rs 13,000 crore in regional rural banks, besides the nearly Rs 80,000 crore-worth loan repayments made in demonetised notes since November 8, 2016.