RBI defends currency note withdrawal

After the Reserve Bank of India's order to withdraw currency notes issued before 2005 was criticised by many, including the BJP, the government and the central bank defended the move saying it was being done to detect fake currency notes in circulation and had nothing to do with the general elections.

The BJP had called the move the “latest gimmick” of the finance ministry and an attempt to obfuscate the issue of black money stashed away abroad.

“This is not an attempt to demonetise. It has nothing to do with elections. This is certainly not the objective. It is an attempt to replace less effective notes with more effective ones. I understand people are making a different interpretation. Unfortunately that should not be the interpretation,” said RBI Governor Raghuram Rajan on Thursday.

CBI Director Ranjit Sinha too had asked him about the timing of the decision, coming as it did before the general election.

There has been a long-standing demand to take these notes out of circulation as they have become less secure. The notes printed after 2005 have greater security features. Sources said the maximum number of fake currency notes to have been found are in the pre-2005 series.

The RBI  said on Wednesday that after March 31, 2014, pre-2005 currency notes would be completely withdrawn from circulation and the public would be required to approach banks to exchange them after that date.

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