India says ban high-value notes: FinMin

Demonetisation of high denomination currency notes like Rs 1,000 and Rs 500 may not help curb black money which is largely held in the form of benami properties, bullion and jewellery, a Finance Ministry report says.

"One common demand from the public is that high denomination currency notes, particularly Rs 1,000 and Rs 500, should be demonetised", says a committee headed by the CBDT chairman in its report to the Finance Ministry.

Baba Ramdev has for long been demanding that all high value notes should be banned. His reasoning is that small denomination notes will be difficult to cart around by black marketers as they will be extremely bulky.

FinMin report said that "in this connection, it is observed that demonetisation may not be a solution for tackling black money or economy, which is largely held in the form of benami properties, bullion and jewellery".

"Further, demonetisation will only increase the cost as more currency notes may have to be printed for disbursing the same amount," it adds.

The report says demonetisation "may also have an adverse impact on the banking system, mainly logistic, issues like handling, and cash transportation may become difficult and also cause inconvenience to the general public as the disbursal or payments of wages/salaries to workers will become difficult."

The suggestion of withdrawing the big currency notes, however, has been turned down by top financial and economic brass of the Ministry which includes chiefs of agencies like the Enforcement Directorate (ED), Directorate Revenue Intelligence (DRI) and the Financial Intelligence Unit (FIU).

The other salient demands made by the public include bringing a voluntary disclosure scheme for black money hoarders and bringing a strong Lokpal Bill.

The feedback from the 'aam aadmi' was received by the Central Board of Direct Taxes (CBDT) which had appealed to the public to share its views on tackling the problem of illegal funds and addressing new measures to curb black economy.

ALSO READ

Cobrapost accuses Reliance Life, Tata AIA, Yes Bank, Birla Sun Life of money laundering

SBI to consider merger of associates banks in July-Aug

South Indian Bank Q4 net profit rises 26%

Muthoot Capital Services net profit up 40%