Black money finds no mention in RBI Governor Das' address on Rs 2,000 notes

Das did not offer black money reduction as an objective of the decision and instead focussed on the falling use of the note and the end of it's normal life.

The issue of black money found no mention in Reserve Bank of India (RBI) Governor Shaktikanta Das' briefing on the withdrawal of Rs 2,000 notes.

In an impromptu address to the media on May 22, Das said that the May 19 decision to withdraw the notes was a result of the RBI's currency management given that the high-denomination note had served its purpose.

The Rs 2,000 note, introduced to remonetise the economy following the government's decision to ban the erstwhile Rs 500 and Rs 1,000 notes in November 2016, had seen its supply steadily decrease over the last few years. As at the end of 2022-23, the value of these notes in circulation stood at Rs 3.62 lakh crore, down from a peak of Rs 6.73 lakh crore at the end of 2017-18.

In his briefing, Das did not offer black money reduction as an objective of the decision and instead focussed on the falling use of the note and the end of its normal life.

"These Rs 2,000 notes were primarily issued for the purpose of quickly replenishing the value of money which was being taken out from the system when the then prevailing Rs 500 and Rs 1,000 notes, when their legal tender status was withdrawn. That time, the Rs 2,000 note was introduced with the specific purpose, with the primary purpose, to put back that much value back in the system," Das told reporters.

"That purpose has been fulfilled," he said, adding that for some time, shopkeepers have been refusing to accept the Rs 2,000 note due to its large denomination and lack of change.

"This reluctance has been there for some time. It may have increased now. But we have clearly said in our notification that the note will continue as legal tender."

"My advice is to please see it as a part of the currency management operations of the Reserve Bank. That is the primary purpose," the central bank chief said.

The government's demonetisation decision of November 2016 was widely seen as a move to erase the stock of black money in the economy, with the other objectives being to hit counterfeiters and terror financing and promote digital payments.

While black money has not been cited as a reason by the authorities behind the latest decision, speculation remains rife that clamping down on it and tax cheats is a key objective.

As per the deposit/exchange facility guidelines, individuals can exchange up to Rs 20,000 of their Rs 2,000 notes at a time and deposit without limit until September 30. When asked if the RBI will monitor accounts which see a large amount of these notes being deposited, Das said the RBI had no reason to do so.

"There is a set procedure and set of guidelines for cash transactions like exchanging and depositing currency notes with banks. All we have said is that those existing guidelines be followed," he said.

"The RBI does not scrutinise anything (cash being deposited). Other agencies will follow their normal procedure. What they do is up to them."