Board recommended note ban on govt advice, RBI tells Parliament panel

January 10, 2017

New Delhi, Jan 10: Contrary to popular belief, it was the Government which had "advised" the Reserve Bank to junk Rs 500/1000 notes on November 7 and the board of the central bank the very next day recommended the demonetisation.

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In a 7-page note to the Parliament's Department-Related Committee of Finance headed by Congress leader M Veerappa Moily, the RBI stated that the Government had on November 7, 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."

The RBI's Central Board met the very next day to "consider the Government's advice," and after "deliberations," decided to "recommend to Central Government that the legal tender status of the banknotes in the high denominations of Rs 500 and Rs 1000 be withdrawn."

Union Cabinet headed by Prime Minister Narendra Modi met within hours of that recommendation on November 8 and banned circulation of old 500 and 1000 rupee notes.

Some ministers have thus far maintained that the government had only acted on RBI recommendation of demonetisation.

In the note to the panel, RBI said it had been in the last few years working on introduction of new series of banknotes with improved security features to secure them against counterfeiting.

In parallel, the government had been taking steps to curb black money and combat terrorism. "There were reports by intelligence and enforcement agencies that availability of high denomination banknotes made it easier for black money hoarders and counterfeited notes in high denominations were being used for terrorist financing," RBI said.

"It occurred to Government of India and the Reserve Bank that the introduction of new series of notes could provide a very rare and profound opportunity to tackle all the three problems of counterfeiting, terrorist financing and black money by demonetising the banknotes in high denominations of Rs 500 and Rs 1000 or by withdrawing legal tender status of such banknotes...

"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 note said.

The central bank said it had as early as October 7, 2014 suggested to the government the need for introduction of 5,000 and 10,000 rupee notes, keeping in mind the inflation and the need for "facilitating payments and managing the currency logistics". The government, it said, concurred with the introduction of Rs 2000 notes on May 18, 2016.

RBI further said that it recommended to the government on May 27, 2016 that new series of bank notes with new designs, sizes, colors and themes including notes in the new Rs 2, 000 denomination be introduced.

"Government gave their final approval on June 7, 2016 and accordingly, the presses were advised in June 2016 to initiate production of new series notes.

"Since any new design notes or new denomination will catch the fancy of the public, it was decided that enough large quantities of Rs notes of 2,000 will be printed so that across the country such new notes can be issued simultaneously," it said.

Stating that when the stock of new notes printed was reaching a critical minimum, the decision to withdraw the legal tender could be made, RBI said the government, in its November 7 advice, mentioned that "cash has been a facilitator of black money since transactions made in cash do not leave any audit trail."

"Elimination of black money will eliminate the long shadow of the ghost economy and will be positive for India's growth outlook. They also observed that in the last 5 years, there has been an increase in the circulation of Rs 500 and Rs 1000 notes with an increasing incidence of counterfeiting of these notes," the Parliamentary panel was told.

"There have been widespread reports of the usage of FICN (Fake Indian Currency Note) for financing of terrorism and drug financing. The Fake Indian Currency Notes have their origin in neighboring 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 500 and 1000 rupee notes, it said.

In recommending demonetisation, the RBI board "observed that such a proposal could not have come at a more opportune time than coinciding with the introduction of the MG (New) series of notes. With these, the existing banknotes can be summarily withdrawn, and the new design notes with more counterfeit resistance features be introduced."

RBI said it might not have been immediately possible to replace these notes fully in terms of both value and volume on one to one basis, within a specific time.

"However, the stock of Rs 2000 denomination were arriving in RBI offices and were being dispatched to currency chests across the country and that could enable meeting a significant critical portion of the physical demand there from in value terms.

"Besides, electronic means of transaction were expected to take another part of the transaction load hitherto met from physical currency. Further, the available stock of other denominations at RBI and currency chests would also help meet demand," it said.

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March 17,2024

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New Delhi: The Election Commission on Sunday made public fresh data on electoral bonds, which it had submitted in sealed covers to the Supreme Court and was later asked to put it in public domain.

These details are believed to be pertaining to the period before April 12, 2019. Electoral bond details after this date was made public by the poll panel last week.

The BJP encashed electoral bonds totalling Rs 6,986.5 crore; maximum Rs 2,555 crore received in 2019-20, as per the EC data.

The Trinamool Congress received Rs 1,397 crore through electoral bonds, second largest recipient after BJP, as per the EC data.

On the other hand, the Congress redeemed a total of Rs 1,334.35 crore through electoral bonds.

DMK received Rs 656.5 crore through electoral bonds, including Rs 509 crore from lottery king Santiago Martin's Future Gaming.

BJD encashed electoral bonds worth Rs 944.5 crore, YSR Congress Rs 442.8 crore, TDP Rs 181.35 crore.

Political parties had filed data on electoral bonds in sealed cover as directed by the Supreme Court's interim order dated April 12, 2019, the poll panel said in a statement.

"Data so received from political parties was deposited in the Supreme Court without opening sealed covers. In pursuance of the Supreme Court's order dated March 15, 2024, the Registry of the Supreme Court has returned physical copies along with a digitized record of the same in a pen drive in sealed cover. The Election Commission of India has today uploaded the data received in the digitized form from the registry of the Supreme Court on electoral bonds on its website," EC said.

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March 16,2024

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New Delhi: The 2024 general election for 543 Lok Sabha seats will be held in seven phases from April 19, Chief Election Commissioner Rajeev Kumar said today, announcing the largest democratic exercise in the world. Results will be announced on June 4.

The seven phases: 
April 19
April 26
May 7
May 13
May 20
May 25
June 1

Simultaneous election for Lok Sabha and assembly will be held in four states -- Sikkim, Odisha, Arunachal Pradesh and Andhra.  

By-elections will also be held for 26 assembly seats across multiple states, including Bihar, Gujarat, Haryana, Jharkhand, Maharashtra, Rajasthan and Tamil Nadu.

Mr Kumar, announcing the dates, sent out a strong message on fake news on social media, saying political parties should ensure responsible social media behaviour -- "verify before you amplify".

"Fake news will be dealt with severely as per existent laws.. Section 79 (3)(B) of the IT Act empowers nodal officers in each state to remove unlawful content," he said.

The other strong message was on violation of model code in terms of hate speeches. "There should be issue-based campaign, no hate speeches, no speeches along caste or religious lines, no criticism of anyone's personal lives," he said.

The media must clarify when they carry political adverts, those cannot masquerade as news, he said. Individual messages regarding this would be sent to the candidates, he added.

The commission has employed 2,100 advisors to keep an eye on these issues and strong action will be taken regarding this, he said.

Voters above the age of 85 years and persons with disabilities, with 40 per cent disability can vote from home, Mr Kumar said. Around 82 lakh voter are above the age of 85, he said.

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March 28,2024

New Delhi: After India summoned an American diplomat over their remarks on the arrest of Delhi Chief Minister Arvind Kejriwal in the liquor policy case, the US reiterated on Wednesday its call for "fair, transparent, timely legal processes".

We continue to follow these actions closely, including the arrest of Delhi Chief Minister Arvind Kejriwal, said US State Department Spokesperson Matthew Miller while responding to questions on India summoning Gloria Berbena, the US Acting Deputy Chief of Mission in New Delhi.

The meeting at the foreign ministry's South Block office lasted nearly 40 minutes yesterday with India objecting strongly to the US remarks on the arrest of Mr Kejriwal.

Miller also responded to a question on the Congress party's frozen bank accounts, saying, "We are also aware of the Congress party's allegations that tax authorities have frozen some of their bank accounts in a manner that will make it challenging to effectively campaign in the upcoming elections."

He said the US encourages "fair, transparent and timely legal processes" for each of these issues.

"With respect to your first question, I'm not going to talk about any private diplomatic conversations, but of course, what we have said publicly is what I just said from here, that we encourage fair, transparent, timely legal processes. We don't think anyone should object to that," he said.

Mr Kejriwal was arrested last week by the Enforcement Directorate (ED), the third Aam Aadmi Party (AAP) leader after Manish Sisodia and Sanjay Singh to be taken into custody in connection with the alleged liquor policy scam.

The US State Department on Tuesday said it is monitoring reports of Mr Kejriwal's arrest and called on New Delhi to ensure "a fair and timely legal process" for the jailed Chief Minister.

India objected to it and warned of "unhealthy precedents".

"States are expected to be respectful of the sovereignty and internal affairs of others, and this responsibility is even more so in case of fellow democracies. It could otherwise end up setting unhealthy precedents," the foreign ministry said.

"India's legal processes are based on an independent judiciary which is committed to objective and timely outcomes. Casting aspersions on that is unwarranted," the ministry stressed.

The US remarks came days after Germany's Foreign Office stressed that Mr Kejriwal is entitled to a fair and impartial trial. The Indian government had reacted strongly and summoned the German envoy, labelling their remark "blatant interference in internal matters".

The excise policy was introduced to bring an overhaul to the liquor business in Delhi, but was scrapped after Lieutenant Governor VK Saxena ordered a probe into the alleged irregularities in the policy. The ED believes the bribe money from the policy was allegedly used for funding the AAP's election campaigns. It has also called Mr Kejriwal a "conspirator" in the case.

His arrest just ahead of the 2024 Lok Sabha election has also prompted furious protests from the opposition camp.

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