From the Viewsroom

Deceived by multiple IDs

Tina Edwin | Updated on January 15, 2018


How curbs on changing old notes were circumvented

Multiple identification documents can be a boon and a bane, as the finance ministry and the banking sector would have discovered following the demonetisation of the ₹500 and ₹1,000 banknotes. None of these documents is linked to the other, and that proved to be the undoing of the ceiling the government fixed for over the counter exchange of these notes. That also explains why the Centre decreed banks should use indelible ink to mark the finger of those exchanging demonetised notes and lowered the cap to ₹2,000 per individual from ₹4,500.

Unfortunately for the banking system, indelible ink was in short supply and there was no way to check if a person had already changed her demonetised banknotes for legal tender. This is because the RBI allowed individuals changing notes to use either Aadhaar card, Voter ID card, driving licence, passport, NREGA card, PAN card as well as I-cards issued by government departments and PSUs to their staff as proof of their identity.

Most adults are likely to have at least three of these documents and a small segment as many as six. So each time a person went to any bank to change old banknotes, they could use a different identity card. As a result, there would be individuals who have managed to change as much as ₹27,000 worth of old banknotes either for themselves or for others for a commission. The software platforms only seek information of the ID proof produced at that point and not all the other identity documents a person may possess. The system is designed only to prevent re-use of a specific ID to change notes.

While linking all identification documents is likely to be challenged in the courts, the government needs to consider if it is time reduce the number of IDs required and the ones could possibly be linked.

Senior Deputy Editor

Published on November 27, 2016

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