The Delhi High Court on Monday dismissed a public interest litigation challenging a notification issued by India's largest lender State Bank of India allowing the exchange of ₹2000 currency notes without any identity proof.

A division bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad rejected the plea filed by Bharatiya Janata Party (BJP) leader and advocate Ashwini Upadhyay.

Upadhyay argued that the Reserve Bank of India (RBI) has allowed the exchange of notes without obtaining any requisition slip and identity proof and therefore, it is 'arbitrary' and 'irrational'.

During the hearing last week, senior advocate Parag P Tripathi, appearing for RBI, opposed the plea and said that it must be dismissed with exemplary costs.

This comes days after Fortune India reported that several private banks as well as some state-run lenders are asking customers for photo identity proof such as Aadhaar if they want to exchange ₹2000 notes but don't hold an account with the bank.

Private lenders are asking non-bank customers to submit identity proof in order to exchange ₹2000 currency notes.

SBI had earlier said that no identity proof is required to be submitted while exchanging ₹2000 notes. Punjab National Bank too has instructed its branches that there is no need to submit an Aadhaar card or other official verified documents (OVD) in order to exchange ₹2000 notes.

₹2000 notes can be exchanged into other denominations up to a limit of ₹20,000 at a time at any bank.

Last week, RBI governor Shaktikanta Das said that banks should follow the existing guidelines for exchange and deposit of ₹2000 notes. "Banks have not been given any additional guidelines when it comes to ₹2,000 banknotes," Das said. "For example, if one deposits more than ₹50,000 in the bank, they must produce PAN card details. So the existing banking rules will remain in place," he added.

The regulator has asked banks to maintain daily data on deposits and exchange of ₹2000 banknotes and submit the details as and when called for.

In a notification on May 19, the central bank said that the facility of exchange of ₹2000 banknotes across the counter will be provided to the public in the usual manner, without restrictions and subject to compliance with extant Know Your Customer (KYC) norms and other applicable statutory requirements.

"The banks shall also be required to comply with Cash Transaction Reporting (CTR) and Suspicious Transaction Reporting (STR) requirements, where applicable," the notification said.

The RBI said that ₹2000 denomination notes received by the banks must be sorted immediately through Note Sorting Machines (NSMs) for accuracy and genuineness and deposited in the currency chests or kept ready for dispatch to the nearest issuing office of RBI.

The central bank has asked the general public to utilise the time up to September 30, 2023 to deposit or exchange the ₹2000 notes.

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