There has been quite a hullabaloo around the topic on who suggested the note ban for quite some now. Earlier it was being claimed that the demonetisation policy decision was taken by the Reserve bank of India. However, more recently in a note by the apex bank, it has been revealed that the demonetisation policy was in fact, the idea of the central government.
Demonetisation policy decision was that of the govt, RBI merely implemented it – Says RBI Note
This has come as a reply to the inquiry into the demonetisation move by the Parliamentary panel headed by the Congress leader Veerappa Moily.
“Government, on 7th November 2016, advised the Reserve Bank that to mitigate the triple problems of counterfeiting, terrorist financing, and black money, the Central Board of the Reserve Bank may consider withdrawal of the legal tender status of the notes in high denominations of Rs 500 and Rs 1,000”, RBI said in its report.
The apex bank has further told that the policy was implemented a day after the government gave the advice to the central bank. The decision about the printing of Rs 2000 notes was approved by the government presses in May 2016 and the printing process initiated in June last year.
The report has revealed – “It was advised in that letter that cash has been a facilitator of black money…elimination of black money will eliminate the long shadow of ghost economy and will be positive for India’s growth outlook. They also observed that in the last five years, there has been an increase in circulation of Rs 500 and Rs 1000 notes with an increasing incidence of counterfeiting of those notes.”
The details of the note by the central bank have been revealed by the query initiated by the Indian Express.