Telangana News

It is known that recently, the Central Minister Piyush Goyal claimed that, Reserve Bank of India (RBI) recommended demonetization. Contradicting these statements, RBI now said that it was the government which advised it to do so.

RBI, in a 7 page report submitted to a parliamentary panel last month, stated that, "Government, on 7th November, 2016, advised the Reserve Bank that to mitigate the triple problems of counterfeiting, terrorist financing and black money, the Central Board of the Reserve Bank may consider withdrawal of the legal tender status of the notes in high denominations of Rs 500 and Rs 1,000.”

The note also backed the government's move, saying that, "Elimination of black money will eliminate the long shadow of the ghost economy and will be positive for India’s growth outlook."

RBI, in the report, opined that, fake notes are being used for terror and drug financing and demonetization is an effort to curb these practices.

The RBI Central Board met the very next day (i.e November 8) to “consider the Government’s advice,” and after “deliberations,” decided to recommend to Central Government that the legal tender status of the banknotes in the high denominations of Rs 500 and Rs 1000 be withdrawn, said the note.