Bill to replace note ban ordinance passed in LS

NEW DELHI: The Lok Sabha on Tuesday passed the Bill that seeks to end the Reserve Bank of India’s liability in respect of the demonetised notes. The Specified Bank Notes (Cessation of Liabilities) Bill, 2017 also provides that these notes will not be guaranteed by the Central government any more.

The Bill replaces the Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016 promulgated on December 30, 2016.

The government had on November 8 demonetised Rs 500 and Rs 1,000 notes under the RBI Act, 1934. The Bill, which will now go to Rajya Sabha, provides a penalty for those holding more than 10 demonetised notes.


Replying to the debate, finance minister Arun Jaitley dismissed all questions raised over the legality of the move, citing the clauses of the RBI Act under which all decisions were taken.

“Cash creates unfair advantage against the poor,” Jaitley said adding that inconvenience arguments cannot be raised to justify the use of cash.

He said India’s use of cash at 12.2% of GDP is very high. FM also defended the decision to impose penalty on those holding cancelled notes beyond the limit mentioned.

“You cannot allow a parallel currency to operate in the market. So holding the currency beyond a specified limit for research and numismatic purposes will be an offence. This is the rationale behind this Bill,” he said.