The Reserve Bank of India (RBI), on May 19, decided to withdraw ₹2,000 note from circulation.
However, the banknotes in ₹2,000 denomination will continue to be a legal tender.
Unlike the November 2016 shock demonetisation when old ₹500 and ₹1,000 notes were invalidated overnight, the ₹2,000 notes will continue to be a legal tender till September 30.
The RBI added that members of the public may deposit ₹2000 banknotes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch. Deposit into bank accounts can be made in the usual manner, that is, without restrictions and subject to extant instructions and other applicable statutory provisions.
Exchange facility for the ₹2,000 notes up to ₹20,000 at a time would be available from May 23, 2023, and will continue till September 30, the central bank said.
The RBI has advised banks to stop issuing ₹2000 denomination banknotes with immediate effect.
The move comes amid concerns of the highest denomination notes being used to hoard black money. The RBI had stopped printing ₹2,000 notes in 2018-19 and the notes were rarely in circulation.
The ₹2,000 denomination bank note was introduced in November 2016, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of legal tender status of all Rs 500 and Rs 1,000 bank notes in circulation at that time.
The RBI said it has also been observed that ₹2,000 denomination note is not commonly used for transactions. Further, the stock of bank notes in other denominations continues to be adequate to meet the currency requirement of the public, it added.
“In view of the above, and in pursuance of the ‘Clean Note Policy’ of the Reserve Bank of India, it has been decided to withdraw the ₹2,000 denomination bank notes from circulation,” the RBI said.
“Members of the public are encouraged to utilise the time up to September 30, 2023 to deposit and/or exchange the Rs 2,000 bank notes,” the central bank said.
Deposit into bank accounts can be made in the usual manner, that is, without restrictions and subject to extant instructions and other applicable statutory provisions, it said.
“In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of Rs 2,000 bank notes into bank notes of other denominations can be made up to a limit of Rs 20,000 at a time at any bank starting from May 23, 2023,” the RBI said.
To complete the exercise in a time-bound manner and to provide adequate time to the members of public, the RBI has asked all banks to provide deposit and/or exchange facility for Rs 2,000 bank notes until September 30, 2023.
As per the RBI, about 89% of the ₹2,000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life span of 4-5 years.
The total value of such banknotes in circulation has declined from ₹6.73 lakh crore at its peak as on March 31, 2018 (37.3% of notes in circulation) to ₹3.62 lakh crore constituting only 10.8%% of notes in circulation as on March 31, 2023.
In January 2014, the RBI announced withdrawal from circulation all bank notes issued prior to 2005.
SEBI probe into Adani drew a blank: Supreme Court-appointed panel
A six-member expert committee — constituted by the Supreme Court in the Hindenburg-Adani allegations case and headed by former Supreme Court judge, Justice A.M. Sapre — said that the Securities Exchange Board of India (SEBI) has “drawn a blank” and is in a “chicken-and-egg situation” in its investigation into the “ownership” of 13 overseas entities, including 12 Foreign Portfolio Investors (FPIs).
The 173-page report said, “SEBI has found 42 contributories to the assets under management of the 13 overseas entities. Various avenues have been pursued -- including ED, CBDT and various market regulators in the seven jurisdictions where the contributories are situated. SEBI has drawn a blank”.
The foundation of SEBI’s suspicion that led to investigations into the overseas entities’ ownership is that they have “opaque structures”, because the chain of ownership of the 13 entities was not clear.
The committee said that SEBI was investigating the ownership of the 13 entities since October 2020, with regard to allegations in the Hindenburg report about minimum public shareholding.
“The key issue is whether as the law stands, one could draw a conclusion that the FPIs are fronts for the promoters of the Adani Group... If such an outcome in the investigation would come about, it would mean that the promoters would not be compliant with the minimum public shareholding requirement,” the report pointed out.
While it emphasised the need for a “coherent enforcement policy”, the committee concluded that it would not be possible to return a finding of “regulatory failure” in compliance with stipulations governing minimum public shareholding.
The Justice Sapre committee said that the conundrum faced by the market regulator was due to a change in the legislative policy of SEBI under the FPI Regulations 2014 on the basis of a recommendation by a Working Group in 2018. As the law stands, FPIs need to only declare their “beneficial owner”, and not the “last natural person above every person owning economic interest in the FPI”, in conformation with the anti-money laundering law.
“In 2018, the very provision dealing with ‘opaque structure’ and requiring an FPI to be able to disclose every ultimate natural person at the end of the chain of every owner of economic interest in the FPI was done away with,” the report observed.
It said that for the SEBI to put to rest its suspicions, its investigation would require information about the “ultimate economic ownership” — and not just the “beneficial owners” — of the 13 overseas entities under its lens.
The committee said that it was this “dichotomy” between the law as it stood post-2018 on the one hand, and what SEBI wants on the other, that has led the market regulator to draw a blank despite its best efforts.
The securities market regulator suspects wrongdoing, but also finds compliance with various stipulations in attendant regulations. Therefore, the records reveal a chicken-and-egg situation,” the committee noted.
On the issue of price manipulations, the report said that in the case of Adani stocks, 849 alerts were generated by the trading system. These alerts were considered by the stock exchanges in four reports to SEBI. Two of these reports were well before the Hindenburg report and two were after January 24, 2023.
However, no pattern of “artificial trading or wash trades” were found. “In a nutshell, there was no coherent pattern of abusive trading that has come to light,” the report informed the court. Here too, the committee said that it would not be possible to conclude there was any regulatory failure on SEBI’s part, as the regulator had an “active and working surveillance framework to take notice of high price and volume movements”.
The report agreed that there was “certainly high volatility in the Adani stocks after publication of the Hindenburg report”.
“The market’s expectations from, and confidence in the Adani Group was shaken by the allegations in the Hindenbrug report, which was inferential. Although the report was based on publicly available information, it questioned the foundational premises on which the market had proved Adani stocks,” the committee report said.
It noted that mitigating measures from the Adani Group — such as paring down the debt secured by encumbrances on their shareholding, and the infusion of fresh funds into Adani stocks by way of the investment of nearly $2 billion by a private equity investor — have built confidence in the stocks. “Market had repriced and reassessed the Adani stocks… they are stable at the newly repriced level,” it said.
Annual spends upto ₹7 lakh exempted from tax on forex spends
The government, on May 19, blinked on its plan to levy a 20% tax on overseas credit card spending from July 1, in the face of a furore from taxpayers as well as businesses, and decided to exempt any payments by an individual using their international debit or credit cards up to ₹7 lakh per financial year from the levy.
In a statement, the Finance Ministry said this is being done to remove “any procedural ambiguity” as “concerns have been raised about the applicability of Tax Collection at Source (TCS) to small transactions under the Liberalised Remittance Scheme (LRS) from July 1, 2023.”
Earlier this week, the Reserve Bank of India introduced a new provision to capture overseas credit card spends under the LRS, which permits forex remittances of $2.5 lakhs a year for individuals.
The government had separately notified that such overseas spending will also attract a 20% Tax to be collected at source, with a provision to adjust such levies against advance tax payments or seek a refund at the time of filing annual tax returns.
Reacting to sharp criticism from the move, the ministry had issued an elaborate explanation on Thursday with the rationale for the tax levies, and said the move will primarily impact only tour travel packages, gifts to non-residents and domestic high net-worth individuals investing in assets such as real estate, bonds, stocks outside India. “Instances have come to notice where the LRS payments are disproportionately high when compared to the disclosed incomes,” it had reasoned.
On May 19, however, it backtracked partially and said spends upto ₹7 lakh a year will neither come under the LRS nor attract TCS. The necessary changes to the Rules (Foreign Exchange Management (Current Account Transactions Rules), 2000) will be issued separately to facilitate the ₹7 lakh exemption announced. “Existing beneficial TCS treatment for education and health payments will also continue,” the ministry said. Such payments up to ₹7 lakh a year are permitted with a TCS rate of 5%.
LG writes to Kejriwal, alleges ‘unconstitutional brazenness, intimidation, disregard of rules’ by AAP govt
Delhi Lieutenant Governor V.K. Saxena wrote to Chief Minister Arvind Kejriwal on Friday alleging “unconstitutional brazenness, intimidation and disregard of rules and procedures” by the AAP government following the Supreme Court verdict on services matters.
In the letter, the lieutenant governor said that in the past one week, a “gloomy face of governance” emerged in Delhi where “organised, structured and specialised administrative machinery” is yet again facing the “brunt” of “highhandedness” of the political executive.
“I write to you to bring to your notice the unconstitutional brazenness, intimidation and disregard of rules and procedures being indulged into by your government and its ministers, especially...(Services) Minister Saurabh Bharadwaj, ever since the Constitution Bench judgment of the Hon’ble Supreme Court dated 11.05.2023,” Saxena’s letter read.
Alleging a “chaotic style of governance”, Saxena claimed that decisions were being conveyed to him through Twitter and the media and that he was being held to ransom through consistent media pressure. The Delhi government was given executive power in services matters, including transfer and posting of officers, in an important verdict by the Supreme Court last week.
Meanwhile, Delhi’s cabinet ministers met Saxena on Friday over the issue of transfer of the services secretary. The Aam Aadmi Party (AAP) government has alleged that the lieutenant governor was yet to clear the file on the transfer of the services secretary sent two days ago.
SC defers scientific survey to determine age of ‘Shivling’ found at Gyanvapi mosque
The Supreme Court on May 19 deferred the implementation of a direction given by the Allahabad High Court on May 12 to conduct carbon dating and scientific survey of the “shivling” allegedly found in the Gyanvapi mosque premises in Varanasi.
A three-judge Bench headed by Chief Justice of India DY Chandrachud said the “implications of the May 12 order would require closer scrutiny”. The carbon dating and scientific survey of the disputed structure was supposed to be held on May 22. The apex court ordered the exercise to be put on hold till the next date of hearing before it.
The Bench passed the order on a petition filed by the Anjuman Intazamia Masjid Varanasi, the mosque’s caretakers, represented by senior advocate Huzefa Ahmadi, against the High Court order.
“Solicitor General, would you like to take instructions on this… let us examine it a little carefully,” Chief Justice Chandrachud addressed Tushar Mehta, who was appearing for both the Centre and the State of Uttar Pradesh.
The law officer agreed with the court’s suggestion, highlighting the implications that may follow if the carbon dating and scientific survey happened to inadvertently “damage” the structure in question.
“My concern as an officer of the court is if by doing the exercise, there is some damage caused to the structure, which one side says is a shivling and the other side says is a fountain, whatever it may be… we will have to see how it can be done. Your Lordships, we will await your adjudication on this issue,” Mehta said.
Advocate Vishnu Shankar Jain, appearing for the Hindu women who were the plaintiffs in the suit claiming right to worship the shivling, said the High Court’s order was based on a 52-page report filed by the Archaeological Survey of India (ASI). He said the report had categorically stated that no damage would be caused to the ‘shivling’ during the scientific survey.
“0That the structure will not be damaged has already been taken into consideration,” he submitted. Jain asked the apex court to call for the ASI report.
But the court asked him to allow the government time to consider the issue after consultations with the ASI.
“Let the government consider the situation. They will obviously consult the ASI. Let the government also consider other options and the issues involved… These are matters the government has to tread a little carefully about,” the Chief Justice told Jain.
Ahmadi claimed the “so-called report” was not that of the ASI. He said it was filed on May 11. Their side was not given time to file detailed objections in the High Court before the order was passed. He said the lower court had refused the demand for carbon dating earlier. The case was still at the stage of pleadings and it was too early to call for scientific evidence before going into the legal questions involved.
Why is President not inaugurating the new Parliament, Opposition asks
Not inviting President Droupadi Murmu for the inauguration of the new Parliament building is an insult to the President’s office, Opposition leaders said on Friday, reacting to the announcement that Prime Minister Narendra Modi will be inaugurating the building on May 28.
Congress General Secretary (Communication) Jairam Ramesh called the new building Modi’s “personal vanity project”. Tweeting a picture of Modi in the new parliament, he said, “The sole architect, designer and worker for the new Parliament building, which he will inaugurate on May 28th. The picture tells it all — a personal vanity project.”
All India Majlis-e-Ittehadul Muslimeen leader Asaduddin Owaisi pointed out that it is a violation of the established protocol. He tweeted, “Why should the PM inaugurate Parliament? He is head of the executive, not legislature. We have separation of powers & Hon’ble @loksabhaspeaker & RS Chair could have inaugurated. It’s made with public money, why is PM behaving like his ‘friends’ have sponsored it from their private funds?”
General Secretary of the Communist Party of India (CPI), D. Raja said that while the BJP takes credit for appointing the first tribal woman President, due respect is not being accorded to her office. “While the Prime Minister is the head of the government, the President is the head of the Indian state and not inviting her for the inauguration is a blatant insult and undermines her position,” he said. Rajya Sabha MP and senior RJD leader Manoj K. Jha also concurred with this view.
In Brief:
Karnataka Chief Minister-designate Siddaramaiah and his deputy D.K. Shivakumar arrived in New Delhi on May 19 to discuss with the party’s high command the names of Ministers to be inducted into the new Cabinet and the allocation of portfolios. They will also invite the party’s top brass for the swearing-in ceremony on May 20. A meeting of the Congress Legislature Party (CLP) on May 18 formally elected Siddaramaiah as its leader, following which he staked claim with the Governor, who invited him to form the government.
Evening Wrap will return tomorrow.
