Former Reserve Bank deputy governor R Gandhi said withdrawal of the Rs 2,000 bank notes will help in curbing black money to a great extent because people are hoarding the high value currency.
Gandhi, who was leading the currency department during the demonetisation of 2016, said that any systemic impact on payments is unlikely because the notes are not used in day-to-day payments, which mostly go through in a digital manner.
However, the Rs 20,000 limit on a single exchange transaction—where those having the Rs 2,000 notes can go to a bank branch for exchanging the currency with bills of other denominations—may lead to operational inconvenience as some people may have to do multiple visits to a bank branch.
When asked about the impact of the Rs 2,000 notes withdrawal on the agenda of curbing black money, Gandhi said it will help to a great extent, and reminded that one of the intentions of demonetisation was also to curb black money in the economy.
Reserve Bank of India (RBI) regularly keeps on reissuing currency of a specific denomination by launching a new series of notes under the same denomination to replace older currencies, Gandhi said.
On Friday, the RBI announced withdrawal of Rs 2,000 currency notes from circulation, and existing notes in circulation can either be deposited in bank accounts or exchanged by September 30. The bank notes in Rs 2,000 denomination will continue to be a legal tender.