With cash mafias back in business, demonetization comes full circle!

The Cover Story by Tehelka’s Special Investigation Team this fortnight, ‘Cash Mafia is Back’, finds that after the RBI announced its decision on May 19, 2023 to withdraw Rs 2000 notes from circulation, touts have once again become active in getting withdrawn currency notes of Rs 2,000 exchanged with lower denomination tenders.

Indeed the RBI’s move to withdraw Rs 2000 notes from circulation was a stark reminder of the ghosts of demonetisation to those who had stacked huge currency of this denomination. The central bank justified the move by stating that the banknote was introduced to meet the currency requirement after Rs 500 and Rs 1000 banknotes were withdrawn in November 2016, and that by now it had fulfilled its objective. It also cited its ‘Clean Note Policy’ to contend that these notes were nearing the end of their estimated life span.

However, for some it hit the panic button and a reminder of the horrors of a “nation in the queue”.  The note was also an object of ridicule, particularly due to bizarre claims at the time of its introduction, of a nano chip implanted in these. Finding opportunity in adversity, the touts have once again become active. As of March 2023, the share of Rs 2,000 notes in the total value of banknotes in circulation was 10.8%. Little doubt, the RBI announcement, coming just over six-and-a-half years since the 2016 demonetisation when bank notes worth Rs 15.41 lakh crore were scrapped, triggered a sense of déjà vu. To add to it, exchange of Rs 2,000 bank notes was limited to Rs 20,000 at banks at a time and Rs 4,000 per day in remote locations.

Tehelka’s SIT recorded on hidden camera touts boasting that they can exchange these notes in a jiffy. One tout claimed, “I got exchanged currency notes of Rs 2,000 worth Rs 2  crore with lower denomination tenders within 24 hours of the RBI announcement. Of course, all this was black money. During this time, I have come across people who have their rooms filled with illicit cash — all Rs 2000 notes”.  

The tout told the reporter who went as a decoy customer, “Trust me, I will get all your Rs 2000 notes swapped with other denominations on the same day, but you will have to pay me 15 percent as commission”. The Greater Noida based man, who runs transport business, told that during 2016 demonetization too his exchange business had flourished. Another tout who was offered a fictitious deal agreed to exchange notes claiming in chaste Hindi “30 crore tak keh diye hain mainey”.

Post 2016 demonetization, the CBI and the ED had arrested several people,
including some bank officials, for illegal exchange of revoked currency and indulging in money laundering. The re-emergence of cash mafias calls for a repeat action!