Describing the currency being deposited in banks following last month’s demonetisation of high-value notes as money that has lost its earlier “anonymity”, finance minister Arun Jaitley said on Sunday the funds now available with the banks have strengthened the Indian banking system.
“The money that is being deposited in cash form after demonetisation... now the anonymity of that money is gone,” Jaitley said at an event to promote cashless transactions.
“When this money comes into the system, the banking system becomes stronger and there are funds available for rural development, social welfare programmes,” he said.
“Money in the system becomes part of the taxation system too. The long-term benefit of this move is that the shadow, the parallel economy, which was not taxed, of which there was no accounting, which was not answerable, that is now becoming part of the economic system,” the Finance Minister said.
On November 8, the government announced that currency notes of Rs 1,000 and Rs 500 were no longer legal tender, saying the move was aimed against black money, counterfeit currency and terror financing. Citizens have till December 30 to deposit their old currency in banks.