The Reserve Bank of India (RBI) has said that the government will not have to pay interest on new notes that are currently circulating on November 15 as per a Finance Ministry circular.
The RBI said it would allow the finance ministry to amend the circular to make it clearer that there would be no interest paid by the government on notes that have been issued on November 16, the day after demonetisation.
The circular states that, if there is no such demand for notes on November 13, the finance minister can declare a cash surplus.
The circular further states that the RBI will not be able to issue notes with an interest rate below 5 per cent on November 17, and it will not pay interest in excess of the normal daily rate of interest.
“It is to be appreciated that the circular was not given to the finance department to revise the circular as per the norms of the RBI but it was sent to the ministry of finance on November 11,” RBI Governor Raghuram Rajan said in a statement.
He also said that it was not a matter of any legal obligation of the government.
“This is the first time in the history of our country that there has been no such circular,” he said.
The government has not given any specific reasons for the decision.
It has been a matter for a year now that there was no demand for the notes.
The Reserve bank of India had last year set up a committee that looked into the matter.