Banning of high denomination notes will combat terror financing: Urjit Patel

New Delhi: The Reserve Bank of India (RBI) on Tuesday asserted that Prime Minister Narendra Modi-led NDA government`s endeavour to ban Rs 500 and Rs 1000 notes have been taken to combat the misuse of high denomination notes for terror financing and for leaching the hoarding to black money.

RBI Governor Urjit Patel while addressing a press briefing said that this step will help to put an end to the circulation of fake money and that they have increased the production of the new currency.

"The government had observed misuse of high denomination notes for terror financing and also for hoarding black money. The RBI has been concerned about the growing menace of the fake Indian currency notes which has been increasing in numbers," Patel said.

"Notably in recent years, Indian high denomination currency notes are either Rs 500 or Rs 1000 notes have been increasing. However, I must assure you that there has not been any breach of security features but for ordinary and common public the look of the fake currency note is similar to genuine notes, which makes it difficult for them to differentiate the fake ones from the originals," Patel said.

Thus there was an exchange of thought between the RBI and the government. There are multiple objectives that can be achieved with the replacement of the high denomination note with the new series. We have increased our production and trying to provide new currency notes as soon as possible," he added.

Prime Minister Narendra Modi earlier today announced that the currency notes of Rs. 500 and Rs. 1000 denominations will not be legal tender beginning November 9.

The Prime Minister also added that all banks will remain closed for public work tomorrow.

Notes of Rs. 2000 and Rs. 500 will be circulated soon.

The Prime Minister further said that on November 9 and in some places on November 10, ATMs will not work.