Letters: Playing with trust
Letters: Playing with trust: By and large, despite political provocations, citizens accepted the measures conceding the broader objectives of fighting corruption...
With reference to the report, “Fresh curbs on deposits above Rs 5,000” (Business Standard, December 20) the Reserve Bank of India (RBI) circular dated December 19, on deposit of Specified Bank Notes (SBN) issued to banks can impair public trust in the banking system and in the RBI as the institution responsible for currency management.
Following the withdrawal of “legal tender” status of Rs 500 and Rs 1,000 currency notes on November 8, the government and the RBI have issued and implemented various restrictions on deposits and withdrawals of money, many of them for administrative reasons.
By and large, despite political provocations, citizens accepted the measures conceding the broader objectives of fighting corruption, black money and fake currency in the system. Remember, the government has not yet withdrawn the RBI promise to pay value, backed by government guarantee, which made SBNs currency notes in the first place.
The instructions now issued, restricting deposits to just once, giving discretion to bank officials to accept/reject deposits of SBNs and re-routing such deposits compulsorily to deposits under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016, smacks of arbitrariness. If someone alleges that the RBI is acting under “instructions” from the government to “promote” fundraising, the allegation may stick with the central bank.
Such a casual approach to currency management can impair the public trust not only in the central bank but also in the banking system, with long-term implications for the economy.
M G Warrier, Mumbai