Withdrawal Of Rs 2000 Banknote Is Not Demonetisation, Done For Operational Convenience: RBI To Delhi HC

Lawyer Ashwini Kumar Upadhyay has challenged the notifications by the RBI and SBI enabling the exchange of Rs 2000 banknotes without proof as arbitrary and against the laws enacted to curb corruption 

The petitioner has contended in his plea that notifications by the RBI and SBI enabling the exchange of Rs 2000 banknotes without requisition slip and identity proof were arbitrary, irrational.

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The Reserve Bank of India (RBI) on Tuesday told the Delhi High Court that the withdrawal of Rs 2000 notes is not demonetisation but a statutory exercise, and the decision to enable this exchange was taken for operational convenience, reported PTI. Lawyer Ashwini Kumar Upadhyay has challenged the notifications by the RBI and SBI enabling the exchange of Rs 2000 banknotes without proof as arbitrary and against the laws enacted to curb corruption. 

After the hearing, a bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad said it will an pass appropriate order on the public interest litigation, the report said. "Arguments heard. Judgment reserved. We will look into it. We will pass an appropriate order," said the court. 

According to the report, during the hearing, Upadhyay clarified that he was not questioning the decision to withdraw the Rs 2000 banknote, but he criticized the exchange process that lacked the requirement of a slip or identity proof. He emphasised that the exchange of the Rs 2000 banknote should be permitted by depositing it into a bank account.

"Why is ID proof excluded? Every poor has a Jan Dhan account. BPL persons are also connected to bank accounts," Upadhyay said. He also claimed that the present arrangement would only enable mafias, gangsters like "Atiq Ahmed's henchmen" as well as Naxals, the report noted. 

The petition has said that a large amount of the currency has reached either an individual's locker or has “been hoarded by the separatists, terrorists, Maoists, drug smugglers, mining mafias & corrupt people”.

Appearing for RBI, senior advocate Parag P Tripathi said that the court cannot interfere in such matters and that the decision was taken to allow the exchange of the Rs 2000 currency note for operational convenience.  

"This is not demonetisation. Rs 2000 banknote was not commonly used. Other denominations continue to meet currency requirements. This is a statutory exercise. None of the points claimed by the petitioner impinge or deal with constitutional issues," Tripathi added. 

The petitioner has contended in his plea that notifications by the RBI and SBI enabling the exchange of Rs 2000 banknotes without requisition slip and identity proof were arbitrary, irrational, and offend Articles 14 of the Constitution of India, the report noted. 

The petition has said that cash transactions involving high-value currency are a significant contributor to corruption and are used for various illegal activities such as terrorism, naxalism, separatism, radicalism, gambling, smuggling, money laundering, kidnapping, extortion, bribing, and dowry. The petition urges the RBI and SBI to take measures to ensure that Rs 2000 banknotes are only deposited into respective bank accounts.

"Recently, it was announced by the Centre that every family should have Aadhaar card and bank account. Therefore, why RBI is permitting to exchange Rs 2000 banknotes without obtaining identity proof. It is also necessary to state that 80 crore BPL families receive free grains. It means 80 crore Indians rarely use Rs 2,000 banknotes. Therefore, petitioner also seeks direction to RBI and SBI to take steps to ensure that Rs 2000 banknotes are deposited in bank account only," the plea stated, as reported by PTI. 

Depositing Rs 2000 currency notes in bank accounts would ensure that people having black money and disproportionate assets could be identified easily, it noted.

On May 19, the Reserve Bank of India (RBI) announced the withdrawal of Rs 2,000 currency notes from circulation and said existing notes in circulation can either be deposited in bank accounts or exchanged by September 30. However, the banknotes will continue to be legal tender. 

In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, the RBI has said the exchange of Rs 2,000 bank notes into other denominations can be made up to a limit of Rs 20,000 at a time at any bank starting from May 23.

State Bank of India (SBI) has communicated to all its chief general manager of all its local head offices that the exchange facility for Rs 2,000 notes will be available to the public without the need to obtain a requisition slip. Individuals will be allowed to exchange up to Rs 20,000 at a time.

"Further, no identity proof is required to be submitted by the tenderer at the time of exchange," the communication dated May 20 said.