The Reserve Bank of India had decided to issue a new Rs 2,000 currency note in May 2016, before there was any discussion on demonetising Rs 500 and Rs 1,000 notes, the apex bank revealed in its reply to an RTI query filed by The Indian Express. The RBI said its Central Board had held meetings in May, July and August last year, but the proposal to demonetise Rs 500 and Rs 1,000 notes was never discussed. Raghuram Rajan was the RBI chief when the decision to introduce new currency was taken.

According to a separate report by the English daily, the RBI said it was the government’s decision to demonetise Rs 500 and Rs 1,000 currency notes, not theirs. The report said the RBI made this admission in its reply to questions raised by the parliamentary panel headed by Congress leader Veerappa Moily.

Advertisement

Citing elimination of black money, corruption and counterfeiting as its reasons, “the government recommended that the withdrawal of the legal tender character of these notes is apposite,” RBI’s said, according to the English publication. Its recommendation was made on November 7, 2016. The government had also highlighted that fake Indian currency notes were used for financing of terrorism and drug cartels, adding that there has been an increase in counterfeiting of Rs 500 and Rs 1,000 notes over the last five years.

The RBI Central Board had met the very next day [on November 8], and after much deliberation decided to recommended withdrawing Rs 500 and Rs 1,000 notes. “That same evening Prime Minister Narendra Modi addressed the nation and announced the decision to withdraw the notes effective midnight November 8,” the RBI said.

The Centre has faced much criticism from economists and Opposition parties for withdrawing the legal tender status of Rs 500 and Rs 1,000 notes. The country was hit by a severe cash crunch since the decision. The Modi government has also vigorously promoted cashless transactions in the country after demonetisation.