"Given the continuing use of cash in transactions, the government believes that discontinuation of the 5,000 rupee note would adversely affect the efficiency of exchange in business," Reuters reported the ministry as saying in a statement.
Last week, the Senate had passed a resolution calling on the government to withdraw the Rs 5,000 note from circulation. The resolution was moved by Senator Osman Saifullah Khan of the opposition Pakistan People Party.
There were reports that the highest denomination note in Pakistan may be cancelled as it is perceived to have made the carrying and hiding of ill-gotten money easier.
Earlier, the Ministry of Finance had said that in view of the continuing use of cash in transactions, the discontinuation of the Rs 5,000 note will adversely affect the efficiency of exchange in commercial activities and be a source of major discomfort and anxiety for the people.
"As such the very notion of cancellation of such convenience in transactions is preposterous and unequivocally denied," it said.
The ministry further stated that it is pursuing the National Financial Inclusion Strategy in association with the State Bank, through which digital transactions and branch-less banking will be brought to the doorstep of people that would significantly reduce the dependence on currency.
"This is the way to move forward for promoting documentation in the economy rather than by cancelling any existing denomination," it added.
(With inputs from PTI)