RBI, IT Dept should quickly ascertain legitimacy of money deposited post demonetisation: Vice Prez

Vice President M Venkaiah Naidu today said the RBI and the Income Tax Department should ascertain at the earliest whether the money deposited in banks post demonetisation was "white or black" in order to maintain the credibility of the reform.

As part of efforts to curb illicit fund flows in the system, the government had cancelled old Rs 500 and Rs 1,000 notes as legal tenders in November 2016.

After demonetisation, Naidu said, "people started enquiring from drivers, cooks, servants whether they have bank accounts or not". Some people requested them to park some of their ill-gotten money in bank accounts, he added.

Naidu said that there was widespread cynicism about demonetisation and people wanted to know what was the gain when the entire money has reached the banks.

"What was the purpose of demo (demonetisation)? Apart from counterfeit notes, the purpose was to bring money into the system. So, money reached banks with address. What else you want!," he said.

Speaking at the centenary celebration of New India Assurance here, Naidu said it is now for the Reserve Bank of India (RBI) and the Income Tax Department to prove the money which has come back to the banks is white or black".

"That should be done at the earliest so that the credibility of these reforms would be maintained. This is my advice to the RBI and also the other agencies involved," the Vice President said.

Last year, the RBI revealed that 99 per cent of old Rs 500 and Rs 1,000 notes returned to the banking system.

Around Rs 15.28 lakh crore or 99 per cent of the Rs 15.44-lakh-crore worth scrapped currency notes had come back to the banking system during the period from November 8, 2016 and June 30, 2017, as per the RBI data.

Demonetisation was announced on November 8, 2016.

Expressing concern over low penetration of insurance in the country, Naidu asked insurers to devise simple, unique and innovative policies so that people buy products on their own.

"Insurance should become assurance that would be good for the country," he said.

Noting that India is part of the globalised world, Naidu said that "entire world is watching us".

"Both financial inclusion and industrialisation have to take place hand in hand for India to continue its onward march to become one of the leading economies in the world in the next two decades," he said.