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Senior RBI official arrested for ‘illegal currency exchange’

Senior RBI official arrested for ‘illegal currency exchange’

Bangalore: Investigators arrested a central bank official Tuesday for allegedly illegally exchanging old bills worth some 15 million rupees ($222,000) for new ones as the country faces a cash crisis.

The arrest comes at a time when many Indians are struggling to find the cash to buy food following the government’s shock move last month to withdraw high-denomination 500 and 1,000 rupee banknotes from circulation in a bid to tackle tax evasion.

India’s Central Bureau of Investigation arrested K. Michael, an official at the Reserve Bank of India, in the southern city of Bangalore after they found him working with a state bank employee to convert old banknotes without legal documentation.

“K. Michael… has been arrested for his alleged involvement in converting old 500 rupee and 1,000 rupee notes worth 15 million rupees into 100 rupee notes,” a CBI official told AFP on the condition of anonymity.

Investigators also found him hoarding 16 million rupees in new 500 and 2,000 rupee banknotes.

The RBI said Michael was a junior official and had been suspended.

“The concerned employee has been suspended,” SS Mundra, an RBI deputy governor, told reporters.

“We have instituted investigation and due action will be taken once the details are known.”

The CBI has also registered criminal cases of cheating against several public and private bank employees.

Seven middlemen in Bangalore were also arrested for “converting unaccounted cash” and more than nine million rupees were recovered, an official told AFP.

Prime Minister Narendra Modi unleashed chaos with his bombshell move to pull the high-value notes, triggering long queues outside banks and ATMs which have been running dry as thousands throng to them.

The sweeping abolition was meant to bring billions in so-called “black”, or undeclared, money back into the formal system, the government says.

Agence France-Presse