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RBI stops printing Rs 2,000 banknotes; Used for hoarding and tax evasion

RBI stops printing Rs 2,000 banknotes; Used for hoarding and tax evasion: The Reserve Bank of India (RBI) has apparently stopped printing Rs 2,000 currency notes. According to a media report, it is halted as the government doubts the high denomination note is being used for hoarding, tax evasion and money laundering. The halt at the production of Rs 2,000 banknote does not affirms that the denomination will be invalid.

RBI stops printing, circulating Rs 2,000 currency notes: report

In December 2018, banker Uday Kotak said that the outcome of the demonetisation would have been much better if bringing Rs 2,000 notes were avoided.

“I think we would have had significantly better outcomes, if we had just thought about simple things. If you are taking out Rs 500 and Rs 1,000 notes, why would you introduce Rs 2,000 notes?” Kotak asked at former chief economic advisor Arvind Subramanian’s book launch event in Mumbai.

In 2018, the government had said that there was no plan to draw Rs 2,000 notes. When asked a question whether the government is bearing to withdraw the denomination of Rs 2,000, Pon Radhakrishnan (Minister of State for Finance) replied in Lok Sabha that there was no such proposal.

In 2017, an SBI Research report stated that either the Rs 2,000 notes could have stopped printing or the RBI is holding them back.

RBI stops printing Rs 2,000 notes; govt believes high denomination currency being used for hoarding, tax evasion

When compared the data accessible in Lok Sabha with the annual report of RBI, it was observed that up to March 2017, the value of small denomination currency in movement was Rs 3,501 Billion, SBI Ecoflash report said.

It means that on 8 December 2017, the high denomination notes value was about Rs 13,324 Billion. It was further added in the report that the RBI had printed 16,957 Million quantities of Rs 500 notes and 3,654 Million quantities of Rs 2,000 notes. The report was as per the Ministry of Finance in the Lok Sabha on 8 December 2017. The total sum value of such notes is Rs 15,787 Billion.

Soumya Kanti Ghosh, group chief economic adviser, SBI, authored a report that said, “This means that the residual amount of high currency notes (Rs 15,787 billion Rs 13,324 billion) of Rs 2,463 billion may have been printed by the RBI but not supplied in the market.”

Ecoflash said, “ As a logical corollary, as 2000 denomination currency led to challenges in transactions, it thus indeed seems that RBI may have either consciously stopped printing the 2000 denomination notes/or printing in smaller numbers after initially it was printed in ample amount to normalise the liquidity situation.”

Prime Minister Narendra Modi surprised everyone by the explosion of demonetisation. His immediate action has only two motives, to control black money and demolish fake notes. On 8 November 2016, PM Modi changed the denomination currency of the country.