Q: Elaborate the demonetisation of currency in Reserve Bank of India ?

Ans: On 8 November 2016, the Government of India announced the demonetisation of all ₹ 500 and ₹ 1,000 banknotes of the Mahatma Gandhi Series despite being warned by the Reserve Bank of India (RBI). The government claimed that the action would curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism.

The Reserve Bank of India laid down a detailed procedure for the exchange of the demonetised banknotes with new ₹ 500 and ₹ 2,000 banknotes of the Mahatma Gandhi New Series and ₹ 100 banknotes of the preceding Mahatma Gandhi Series.

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