Demonetisation: Senior RBI official arrested for illegal exchange of old notes

The Central Bureau of Investigation (CBI) has arrested a senior special assistant of the Reserve Bank of India in Bengaluru for alleged involvement in a currency exchange racket, according to news agency ANI.

Senior Special Assistant of RBI in Bengaluru arrested by CBI for alleged involvement in currency exchange #DeMonetisation

— ANI (@ANI) December 13, 2016

Media reports said nine men were arrested in connection with alleged exchange of Rs 1.50 crore worth of banned currency notes. [caption id=“attachment_3154260” align=“alignleft” width=“380”]  Reuters[/caption] The government had on 24 November stopped over-the-counter exchange of old currency notes at bank counters, but continues the facility at RBI windows until 30 December. There have been suspicion that old notes are being exchanged at a premium, helping the black money holders to whiten their ill-gotten wealth. A report in The Times of India said the arrested RBI official and others were exchanging the notes at a 15-30 percent commission for exchanging the notes. The Bangalore incident is another proof that illegal exchange of old notes is rampant despite the government and its investigative agencies keeping a hawk’s eye on all such activities after the demonetisation of Rs 500 and Rs 1,000 notes on 8 November. A report in The Economic Times today, however, said the premium for such illegal exchange of old notes have fallen drastically now and the money changers are even ready to pay an interest to black money holders in return for a one-year lock-in. This reversal of trend, according to an economist quoted in the report, indicates that the black money has already entered into the system. Another reason being spoken about is that holders have found new ways to convert their black money into white.