FM: Talks on note ban since Feb ’16

New Delhi, Feb. 7: The Lok Sabha on Tuesday passed a Bill which makes holding of more than 10 old notes of `500/1000 denomination punishable with a minimum fine of `10,000, with the government saying the aim was to check parallel economy using the scrapped notes.

Piloting the Specified Bank Notes (Cessation of Liabilities) Bill, finance minister Arun Jaitley said it will extinguish the government’s liability towards scrapped notes and also eliminate the possibility of their bring used as parallel currency.

“No economy survives with ceased currency that operates in the market. There will be anarchy in the country if non-legal currency operated parallelly in the market,” Mr Jaitley said while replying to the discussion on the Bill which was approved by the House after rejecting the amendments moved by Opposition members.

The Bill, to replace the ordinance promulgated on December 30, also provides for a minimum fine `50,000 for false declaration by persons who were abroad during the demonetisation period (November 9-December 30, 2016) and given time to deposit the scrapped notes with RBI till March 31.Mr Jaitley said the volume of currency in India was extra ordinarily large and this has led to a shadow and parallel economy, facilitating crime and acting as a facilitator for corruption, fake currency, and terrorism.

“We must move to a greater digital economy and therefore free the economy from these vices,” he said adding that the volume of cash which is 12.2 per cent of the GDP is very high as compared to other countries. Mr Jaitley said discussions on demonetisation started with the RBI in February 2016 and later there used to be weekly meetings to oversee the preparations.

The design for new notes was approved by the RBI and the government in May 2016, he said, adding utmost secrecy was maintained keeping in view the nature of the exercise. —PTI