ISLAMABAD: (Parliament Times) The Senate on Monday passed a resolution calling on the government to withdraw high denomination Rs5,000 notes from circulation, after neighbouring India outlawed high-value bank notes last month in a move to curb corruption and tax evasion.
The resolution moved â€” Senator Osman Saifullah Khan of the opposition Pakistan People Party, which has a majority in the Upper House of Parliament â€” was strongly opposed by members of the government.
The resolution called on the government to demonetize the high denomination bank notes “in order to reduce illicit money flow, encourage the use of bank accounts and reduce the size of undocumented economy”.
Most illicit transactions are carried out using the Rs5,000 note, said Senator Saifullah, although he advised the government not to apply the method adopted by New Delhi.
Saifullah suggested that the government stop printing of the high denomination note and gradually pull it out of circulation over the course of between 3 and 5 years.
The resolution was strongly opposed by Federal Minister for Law and Justice Senator Zahid Hamid. He said that around 3.431 trillion bank notes of Rs5,000 denominations were in circulation in Pakistan.
Rs5,000 bank notes comprise a total of 30 percent of the total currency in circulation, he said.
Withdrawing such a large number of bank notes from the economy could cause a monetary crisis, he said, adding that people might prefer foreign currency over the Pakistani rupee in the steep drop in supply of the local currency.
The resolution was passed by the House with majority vote.