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Demonetisation: Why SC’s call to govt, RBI on exchange of old notes may go unheard

There is little chance that the Supreme Court's exhortation to the government and the Reserve Bank of India (RBI) to give another chance to people to deposit their old and invalidated Rs 500 and Rs 1,000 notes in banks, will result in any relief to the ‘honest’ citizen. There are three simple reasons to it.

For one, the government stands on a strong legal ground here, after the passage of the Specified Bank Notes Bill in February, which ended the liability of these currency denominations between the RBI and the government. Also, earlier, the government has stated in the court that it was a conscious decision not to extend the deadline to deposit old notes beyond 30 December, except for certain category of people who were allowed to deposit notes until March end. Those reasons still stand. Judiciary can only interpret the laws, not challenge the legislation itself.

Representational image. PTI

Representational image. PTI

Second, the government will likely put forward its case that the restrictions were intended to prevent black money holders depositing their money in bank branches and opening a new window could jeopardise this process. It can argue that those with genuine cash holdings had enough time to exchange or deposit their old notes with banks and at the RBI counters and chances are that crooks will misuse the opportunity if it opens another window. These are arguments that are likely to come up before the SC when the case comes up for next hearing.

Third, even if the Supreme Court has its way and the government offers another window to the citizens to deposit their old notes, it is likely to be a hard task even to the honest cash holder to explain why he or his family could not do so by 30 December. Remember, towards the end of December (when there were 10 days left for people to deposit their old notes), the RBI had issued a circular to banks asking these institutions to accept deposits above Rs 5,000 “only once during the remaining period till 30 December, 2016".

"The credit in such cases shall be afforded only after questioning (the) tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and (after) receiving a satisfactory explanation,” the RBI had said.

Now, after seven months, if someone approaches a bank with a bundle of old notes, he is unlikely to have a smooth exchange with the banker at the counter, and if the amount is too big, with the tax officer.

The point here is that while SC’s intention is laudable — it wants to help those who didn’t get a chance to deposit their hard earned money — its call is likely to fall on deaf ears.

Updated Date: Jul 04, 2017 16:36 PM

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