Monday, December 5, 2016

[IAC#RG] Demand for immediate exchange of SBN u/s 39 RBI Act 1934

The Governor,
Reserve Bank of India

cc: Cabinet Secretary to the Government of India

Kind attn: Mr. Urjit Patel  (Governor RBI)


Kindly refer to my several emails addressed to you and also sent to the designated email ID under the SBN withdrawal scheme announced on 8.Nov.2016.

It is a matter of concern that I have not received a reply from the issuer Bank (Reserve Bank of India) who induced me over the years to exchange my monetary coinage resources for the Bank's notes under the strength of section 39 of the Reserve Bank of India Act, 1934 (hereinafter "RBI Act") reproduced below.

"39. Obligation to supply different forms of currency.
(1) The Bank shall issue rupee coin on demand in exchange for bank notes and currency notes of the Government  of India, and shall issue currency notes or bank notes on demand in exchange for coin which is legal tender under the Indian Coinage Act, 1906.
(2) The Bank shall, in exchange for currency notes or bank notes of two rupees or upwards, supply currency notes or bank notes of lower value or other coins which are legal tender under the Indian Coinage Act, 1906, in such quantities as may, in the opinion of the Bank, be required for circulation; and the Central Government shall supply such coins to the Bank on demand. If the Central Government at any time fails to supply such coins, the Bank shall be released from its obligations to supply them to the public."

It is well settled that any notifications by the Central Govt u/s 26(2) of RBI Act withdrawing the legal tender status of Bank notes do not extinguish the express obligations of the Bank u/s 39 RBI Act to exchange the withdrawn notes for coin or notes of lower denomination on presentation.

"14. No peculiar significance or special meaning attaches to the word " exchange ": see Baynes & Co. v. Lloyd & Sons [1895] 1 Q.B. 820, 825; and I respectfully agree with the learned Judge in the Court below that Section 39 does impose on the Bank an express obligation to honour its notes in coin whether they are legal tender or not and in the case of bank notes of Rs. 5 and upwards to supply coin or notes of lower denomination'to the note tendered. The only discretion which the bank is given is as to the quantities of coin and notes respectively which it will give in exchange, but it must give one or the other or both. In my opinion the word " exchange " is a word of wider import than the word " pay," Actually on tender of the note with a demand for payment the bank does effect an exqhange, since it retains the tendered note against the coin or the notes of lower denominations." [J.M. D'Souza vs The Reserve Bank Of India on 25 January, 1946, (1946) 48 BOMLR 365]

There is now a serious situation prevailing in the country that the Reserve Bank of India along with the scheduled Banks quite evidently do not possess sufficient coin or notes of lower denominations to exchange the SBN notes on demand. At best the depositors are being offered the worthless higher denomination notes of Rs. 2,000 contrary to the provisions of the RBI Act, and even those in rationed quantities which are useless for circulation. This further causes us to apprehend that the scheduled banks are under-provisioned, saddled with fake currency notes inserted into the economy by Ponzi operators and para-bankers and on the verge of collapse.

It is thereby relevant to remind you that on 6 April 2015, the India Against Corruption movement had formally complained to the Nodal Regional Office Grievance Redressal Cell at New Delhi, Reserve Bank of India, Email:; reporting the extraordinary prevalance of very high quality counterfeit notes of MG series in circulation and calling for their immediate demonetisation. Our complaint was widely reported in the reputed financial dailies the next day. On 24 April 2015 we were advised by Shri Parminder Singh AGM Issue Dept our complaint was forwarded to RBI's Central Office, wherefrom we received RBI's further assurances that our complaint was under active consideration. On or about 16 Sept 2016 we came to know that Rs. 500 and Rs 1,000 notes were being withdrawn. However, on 29 September 2016 we were shocked to learn that the RBI's replacement notes would continue to bear Mr. Gandhi's likeness.

It is thus not clear to us why there is this gross mismanagement in the demonetisation process and why it is being carried out so belatedly and with such incompetence and harassment to the public at large. It seems to us that the demonetisation process is actually being carried out to benefit international currency speculators like Mr. George Soros who were entirely privy to the demonetisation scheme well in advance and to devalue the Indian rupee.

For these reasons and the other reasons expressed by us previously in our communications, we no longer have faith in the Banking system of India or the MG series Bank notes issued by RBI and hence demand that you immediately exchange all the SBN notes we hold for coinage of the same face value or lower denomination notes of non-MG series which are legal tender.

Accordingly, kindly communicate to us immediately where we can present our SBN notes for exchange u/s 39 RBI Act across the counter in satisfaction for your promises.


Sarbajit Roy
National Convenor
B-59 Defence Colony
New Delhi, 110024
Tel: +91-8010205897

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