RBI defends ₹2,000 banknote exchange before HC, says it is statutory exercise

New Delhi: The Reserve Bank of India (RBI) today informed the Delhi High Court that the decision to allow the exchange of old 2000 rupee notes was made for operational convenience and that the withdrawal of these notes is not demonetisation but a statutory exercise.

The court was considering an argument made by attorney Ashwini Kumar Upadhyay that the notices issued by the RBI and SBI allowing the exchange of 2000 rupee banknotes without any proof were arbitrary and in violation of the rules designed to fight corruption.

A bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad said it will pass appropriate orders on the public interest litigation by the lawyer.

"We will look into it. We will pass an appropriate order," said the court.

Mr Upadhyay clarified that he was not challenging the decision to withdraw ₹ 2000 banknote but assailed the exchange of the currency without any slip or identity proof.

He asserted that the exchange of ₹ 2000 banknotes should be allowed through deposits in bank accounts.

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

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

"This is not demonetisation. ₹ 2000 banknote was not commonly used. Other denominations continue to meet currency requirements," he said.

"This is a statutory exercise. None of the points claimed by the petitioner impinge or deal with constitutional issues," Mr Tripathi added.

"Arguments heard. Judgement reserved," the court said after hearing the parties.

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

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

The petition has highlighted that cash transaction in high-value currency is the main source of corruption and is used for illegal activities like terrorism, naxalism, separatism, radicalism, gambling, smuggling, money laundering, kidnapping, extortion, bribing and dowry, etc. and the RBI and SBI should ensure that ₹ 2000 banknotes are deposited in respective bank accounts only.

"Recently, it was announced by the Centre that every family should have an Aadhaar card and bank account. Therefore, why RBI is permitting to exchange ₹ 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 ₹ 2,000 banknotes. Therefore, petitioner also seeks direction to RBI and SBI to take steps to ensure that ₹ 2000 banknotes are deposited in bank account only," the plea stated.

Depositing ₹ 2000 currency notes in bank accounts would ensure that people having black money and disproportionate assets could be identified easily, the plea has said.

On May 19, the Reserve Bank of India (RBI) had announced the withdrawal of ₹ 2,000 currency notes from circulation and said existing notes in circulation can either be deposited in bank accounts or exchanged by September 30.

The banknotes in ₹ 2,000 denomination will continue to be a legal tender, the RBI said in a statement.

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

In a communication to the chief general manager of all its local head offices, the State Bank of India (SBI) informed that the facility of exchange of ₹ 2,000 notes by the public up to a limit of ₹ 20,000 at a time will be allowed without obtaining any requisition slip.

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

With PTI inputs