The withdrawal of Rs 2000 denomination banknotes from circulation was a “currency management exercise” and a matter of economic policy, the RBI informed the Delhi High Court on Friday.

The court, which was hearing a public interest litigation challenging the RBI's decision to withdraw the banknote from circulation, posted the matter for hearing on May 29.

A bench headed by Chief Justice Satish Chandra Sharma was asked by the RBI to defer hearing on the plea in light of the fact that the verdict stands reserved by the court on another PIL concerning the withdrawal notification.

“List the matter on Monday. Give a small note also,” the bench, which also comprised Justice Subramonium Prasad, told the parties.

RBI counsel, senior advocate Parag P Tripathi, said the present petition by Rajneesh Bhaskar Gupta was “misplaced” as withdrawal of Rs 2000 denomination banknotes was a “currency management exercise” and not demonetisation, and a matter of economic policy.

“This issue of alleged demonetisation was the subject matter of an earlier writ petition where your lordship has reserved order. Let that order come. Your lordship may have it after that,” he said.

Earlier this week, the court had said it would pass an order on the plea by lawyer Ashwini Kumar Upadhyay, which claimed notifications by the RBI and SBI enabling exchange of Rs 2000 banknotes without proof were arbitrary and against the laws enacted to curb corruption.

The RBI had then said withdrawal of Rs 2000 notes was not demonetisation but a statutory exercise, and the decision to enable their exchange was taken for operational convenience.

The petitioner in the instant case has contended that the RBI has no power to withdraw circulation of Rs 2000 currency notes and only the Centre could have taken a decision in this regard.

In his petition, the petitioner submitted that the RBI has no independent power to direct the non-issue or discontinuance of issue of banknotes of any denominational values and this power is vested only with the Centre under section 24 (2) of the RBI Act, 1934.

It added that the RBI notification gave no other reason except “Clean Note Policy” for the “big arbitrary decision of withdrawing the Rs 2000 denomination banknotes from circulation without analysis of the expected problems of the public at large”.

“RBI has not cleared so far what is the benefit to the RBI or National Economy after withdrawing the denomination of Rs.2000/- banknote from circulation, however the hardship to the citizen of the country is very well known and seen during the demonetization of denomination of Rs.500 and Rs 1000 in the year 2016 and withdrawn of Rs.2000 is not much different from previous demonetization,” the plea said.

On May 19, the Reserve Bank of India (RBI) had announced withdrawal of Rs 2,000 currency notes from circulation, and said existing notes in circulation can either be deposited in bank accounts or exchanged by September 30.

The bank notes in Rs 2,000 denomination will continue to be a legal tender, the RBI said in a statement.

In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, the RBI has said exchange of Rs 2,000 bank notes into bank notes of other denominations can be made up to a limit of Rs 20,000 at a time at any bank starting from May 23.

In a communication to chief general manager of all its local head offices, State Bank of India (SBI) informed that the facility of exchange of Rs 2,000 notes by public up to a limit of Rs 20,000 at a time will be allowed without obtaining any requisition slip.

"Further, no identity proof is required to be submitted by the tenderer at the time of exchange," the communication dated May 20 said.

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