RBI to withdraw all currency notes issued before 2005

RBI to withdraw all currency notes issued before 2005The Reserve Bank of India (RBI) on Wednesday announced that it would withdraw all currency notes issued before 2005 from April 1, 2014.

The move is being seen as the central bank's two-pronged strategy to tackle the problems of black money and fake currency notes in the system.

Commenting on the central bank's move, a board member of a foreign fund, said, "The move is akin to demonetisation and will impact hoarders of cash (black money) and weed out fake currencies to a large extent from the system."

Some experts are of the view that the central bank has already withdrawn these notes from the system as paper currency notes don't have such a long life span of ten years.

Experts from the financial sector have repeatedly cautioned that fake currency notes, particularly pumped into the economy by neighbouring countries like Pakistan, have been eroding the economy.

Some estimates suggest that 10-15 per cent of all currency notes in circulation in the country are fake notes.  According to available data, the amount held by public as of December 2005, was close to Rs 4 trillion.  As of December 27 last year, the amount jumped to Rs 12 trillion.