RBI Has No Information On Black Money Removed By Note Ban
RBI does not know how much black money was legitimised after demonetisation.
The Reserve Bank of India has told a parliamentary panel that it has “no information” on how much black money has been extinguished as a result of the demonetisation of old Rs 500 and Rs 1,000 notes or about the unaccounted cash that was legitimised through exchange of currency post note ban.
Stating that an estimated Rs 15.28 lakh crore in junked notes has come back “subject to future corrections based on verification process”, the Reserve Bank also added that it does not know whether demonetisation is being planned to be implemented at regular intervals.
The RBI has been facing flak from the opposition parties for demonetisation and delay in disclosing figures on the junked notes, even as the government has maintained that the November 8, 2016 decision to ban old high value notes at that time has helped in curbing black money, among other benefits.
Last week in its annual report, the RBI had finally made public the details of the junked notes that have come back into the system. It disclosed that all but about 1 percent of the scrapped currency notes have come back into the system.
Replying to queries from the panel, the RBI said the verification for authenticity and numerical accuracy is still on, while some of the demonetised notes, which were accepted by banks and post offices, are still lying in currency chests.
The central bank also informed the panel that the completion of the process of verification will take time in view of the large volume involved. The process is “going on in full swing” with most RBI offices working in double shifts and with the help of high-end verification machines, the central bank said.
“Till such time, these notes are processed by the RBI, their numerical accuracy and authenticity, only in estimation of SBNs (specified bank notes) received back is possible,” the RBI said in its written reply to the panel.
The central bank did not give any direct reply on adverse impact on the informal and unorganised sector, as also about the loss to gross domestic product. The RBI said the deceleration in overall economic growth figures for 2016-17 had begun “much before demonetisation” due to weakness in industrial and services sector.
The government had on November 8, banned old Rs 500 and Rs 1,000 notes in an attempt to weed out black money in the country. The old notes were allowed to be deposited in banks, with unusual deposits coming under income tax scrutiny.
The government replaced old Rs 500 notes with new ones, but no replacement for Rs 1,000 notes has been made. Instead, a new Rs 2,000 note was introduced post note ban.