Did RBI have authority to issue Rs 2,000 and Rs 200 currency notes?

In what could be a bizarre situation, the Reserve Bank Of India (RBI) does not seem to have any official records to prove that it had authorised the issue of new currency notes in denominations of Rs 2,000 and Rs 200, after demonetisation, according to documents available through RTI.

"As per RTI replies provided by the RBI, the country's central bank has apparently not published any Government Resolution (GR) or a circular till date to issue the new Rs 2,000 and recently, the Rs 200 currency notes," says Mumbai-based RTI activist M S Roy.

A May 19, 2016, document — roughly around six months before demonetisation — shows that the RBI's Central Board of Directors approved a proposal put forth by its Executive Director on May 18, 2016.

 

This (proposal) pertained to the new designs, dimensions and denominations of future Indian bank notes, and the Board resolved to forward it to the central government for approval, as per extracts of the minutes of that Board meeting.

Essentially, this was carrying forward an earlier such proposal made on July 08, 1993 to introduce a new family of Indian banknotes of Rs 10, Rs 20, Rs 50, Rs 100 and Rs 500 of reduced sizes.

This old proposal (July 08, 1993) was approved at an RBI Central Board Of Directors meeting on July 15, 1993 as per a memorandum dated August 3, 1993 sent from RBI's Central Office, Mumbai, to the Chief Officer, Department Of Currency Manager (RBI Mumbai), which was signed by the then Executive Director, A P Aiyer.

As per that proposal (of July 8, 1993), these new Indian currency notes of reduced size were to incorporate several fresh and enhanced security features in order to check counterfeiting, according to the same August 3, 1993, memorandum (quoted above).

Roy had also filed a separate RTI query on February 27, 2017, asking for documentation about photographs of Mahatma Gandhi which are not being printed on the Re 1 notes, but were being printed on all currency notes of denominations ranging from Rs 5 to Rs 2,000.

In reply to this particular query, the RBI provided resolutions of its board meetings held on July 15, 1993, July 13, 1994, and May 19, 2016.

However, these resolutions talk about design features merely for Rs 10, Rs 20, Rs 50, Rs 100 and Rs 500, all of which bear the photographs of the Father of the Nation.

None of these RBI board resolutions make any references to design features or Mahatma Gandhi photographs for denominations of Rs 1,000, Rs 2,000 and now, the latest entrant to the Indian banknotes family, the Rs 200 currency note.

Hence, Roy said that if the RBI board resolutions never even discussed design features or Mahatma Gandhi photographs to be incorporated in Rs 1,000 notes (discontinued after demonetisation), Rs 2,000 denomination notes (introduced on November 8, 2016) and the subsequent Rs 200 notes (introduced in mid-2017), it clearly indicates that no official approval was granted.

He questioned that if no approval was granted for issuing these denominations, who authorised these denominations, their design, printing and distribution.

"If there has been no approval by the RBI Board, no supporting GR or any other known documentation in the public domain, then there is a big question mark about the legal validity and official (monetary) status of these notes — namely Rs.200 and Rs.2,000. The matter merits an independent investigation," Roy said.

However, if such approvals do indeed exist, then the RBI and government must explain why these documents were not made available despite an RTI query or why they were not in the public domain.