RBI defends before Delhi HC ₹2,000 banknote exchange exercise

The Reserve Bank of India (RBI) on Tuesday told the Delhi High Court that withdrawal of ₹2,000 notes is not demonetisation but a statutory exercise, and the decision to enable their exchange was taken for operational convenience.

The court was hearing a plea by lawyer Ashwini Kumar Upadhyay that the notifications by the RBI and SBI enabling exchange of ₹2,000 banknotes without proof were arbitrary and against the laws enacted to curb corruption. 

A bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad said it will pass an appropriate order 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 ₹2,000 banknote but assailed the exchange of the currency without any slip or identity proof. He asserted that the exchange of ₹2,000 banknote should be allowed through deposit in bank account.  

“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 Naxals. 

Senior advocate Parag P. Tripathi, for the RBI, emphasised that the court cannot interfere in such matters and the decision was taken to allow exchange of the ₹2,000 currency note for operational convenience.  

“This is not demonetisation. ₹2,000 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 ₹2,000 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 ₹2,000 banknotes are deposited in respective bank accounts only.

“Recently, it was announced by the Centre that every family should have Aadhaar card and bank account. Therefore, why RBI is permitting to exchange ₹2,000 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 Rs 2000 banknotes are deposited in bank account only,” the plea stated. 

Depositing ₹2,000 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 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 bank notes 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 bank notes 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 chief general manager of all its local head offices, State Bank of India (SBI) informed that the facility of exchange of ₹2,000 notes by 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.