Government denies intentions to demonetise 100 and 50 rupee notes

The union government has categorically said that it has no intention to demonetise Rs 100 and Rs 50 notes to dispel rumours which are making rounds in various platforms like social media. It has issued a series of tweets to dispel the myths.

Key announcements

• It has no intention to demonetise Rs 100 and Rs 50 notes.
• On complaints that Rs 2000 notes are of poor quality as colour easily comes off, the government has said that it is a part of the security feature. The currency notes have intaglio printing on them. If the ink colour comes off while rubbing it with a cloth, then it is a genuine currency note. The colour comes off due to the creation of turbo-electric effect on rubbing, which transfers the colour onto the cloth.
• It has rejected the rumour that Rs 2,000 note is fitted with a chip for tracking purposes.
• No intention to seal bank lockers and freeze gold and diamond jewellery.
• It has said that the amendments made in Benami Transactions Act and information sharing agreements signed with foreign countries would be used to check black money.

Background

On November 8, 2016 Prime Minister announced that Rs 500 and Rs 1000 denomination notes will become invalid and all notes in the lower denomination of Rs 100, Rs 50, Rs 20, Rs 10, Rs 5, Rs 2 and Re 1 and all coins will continue to be a valid legal tender. He also added that new notes of Rs 2,000 and Rs 500 will be introduced. There was also no change effected in any other form of currency exchange like cheque, Demand draft (DD), payments made through credit cards and debit cards. The move was taken to curb the menace of black money, fake notes, and corruption by reducing the amount of cash available in the system.

Demonetisation

Demonetisation is a radical monetary step in which a currency unit is declared as an invalid legal tender. This is usually done whenever there is a change in the national currency of a nation. Such a step is especially taken to curb the menace of counterfeiting, black money and money laundering. Countries like Zimbabwe, Fiji, Singapore and Philippines have also opted for currency demonetisation in the past.