A Study on Impact of Demonetization of Currency in Indian Banking Scenario

Abstract

The aim behind the government’s action was to combat tax cheating, counterfeiting and corruption. Eliminating large denominations makes it harder to hide large amounts of cash.The government’s demonetisation of Rs 500 and Rs 1000 notes is a contentious issue, but is understandable. Such schemes may have not worked in the past, but a political commitment had to be honoured. The question is not whether the government is right for demonetising the currency; instead, the concerns are centred on why they adopted this chaotic and surreptitious approach.It is a radical financial step in which a currency unit's status as a legal tender is declared invalid. This move is usually executed when old currencies have to be replaced by new one's or whenever there is a change of national currency. However, given the extent to which the project has to be executed, the move has to be well planned in advance.