Rs 2,000 currency note ban: Rs 2,000 note was 'band-aid' to cover up 'foolish decision' of demonetisation, says Chidambaram

Senior Congress leader P Chidambaram on Friday hit out at the government after the RBI announced withdrawal of Rs 2,000 currency notes from circulation, saying the Rs 2,000 note was a "band-aid" to cover up the "foolish decision" of demonetising Rs 500 and Rs 1,000 notes.

The former Union finance minister said that a few weeks after demonetisation, the government and the RBI were forced to re-introduce the Rs 500 note and he will not be surprised if the Centre re-introduces the Rs 1,000 note as well.

In a surprise move, the Reserve Bank of India (RBI) on Friday announced withdrawal of Rs 2,000 currency notes from circulation but gave public time till September 30 to either deposit such notes in accounts or exchange them at banks. Unlike the November 2016 shock demonetisation when old Rs 500 and Rs 1,000 notes were invalidated overnight, the Rs 2,000 notes will continue to be a legal tender till September 30.

In a tweet, Chidambaram said, "As expected, the government/RBI have withdrawn the Rs 2,000 note and given time until September 30 to exchange the notes. The Rs 2,000 note is hardly a popular medium of exchange. We said this in November 2016 and we have been proved correct." The Rs 2,000 note was a "band-aid" to cover up the "foolish decision" of demonetising Rs 500 and Rs 1,000 notes which were popular and widely exchanged currencies, the former finance minister said.

A few weeks after demonetisation, the government and the RBI were forced to re-introduce the Rs 500 note, Chidambaram said. "I shall not be surprised if the government/RBI re-introduced the Rs 1,000 note as well. Demonetisation has come full circle!" he said.

In a statement, the RBI said it has asked banks to stop issuing Rs 2,000 notes with immediate effect.

While the RBI did not specify a limit for depositing the Rs 2,000 currency notes in bank accounts, exchange of a maximum of Rs 20,000 (10 notes of Rs 2,000) for other currency notes will be allowed at a time.