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Q. RBI lifts all restriction of withdrawal: In the backdrop of lifting all restriction of withdrawal, discuss the need to disclose all information of deposition of money in the form of old currency.
Mar 15, 2017 Related to : GS Paper-3

Ans :

Introduction-

Recently the Reserve Bank (RBI) of India has lifted all restrictions on cash withdrawals from savings bank accounts imposed on November 8, 2016 after the withdrawal of Rs 500 and Rs 1,000 notes. The removal of withdrawal limit is in keeping the announcement by the RBI last month. It is welcome move, now it is right time that the RBI has to disclose how many old notes that had been held by the public came back to the banking system.

Why information needs to be disclosed-?

  • When the demonetisation has announced in November, the Government and RBI asked people to submit all old currencies of Rs. 500 and 1000 to banks. The denotified Rs. 500 and Rs. 1,000 currency notes constituted 86.9% of the value of total currency in circulation.
  • The RBI had said that Rs8.45 lakh crore was deposited and exchanged during November 10-27, but did not release any further data. In this backdrop it is responsibility of the RBI to disclose how many old notes that had been held by the public came back to the banking system.
  • Similarly, it should also disclose how much money failed to come back to the banking system. The money which could not came back to banking system will be the amount of black money that people have been forced to extinguish, in order to escape investigation into tax avoidance and/or sources of the income. 
  • That would be a ready measure of the demonetisation scheme’s success in achieving the stated goal of destroying black money. Hence there is no reason to withhold such reasons, as of now all the restrictions were lifted.

Conclusion-

The demonetization was done mainly to tackle the menace of black money and the government has announced that it has been successful in achieving its objective. Now most of the process related to demonetization is over, its time for RBI to disclose all information related to deposition, through which people of the nation can measure success of demonetization.  


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