Each 2,000 note is valued at Rs 5 lakh among the racketeers.

Each 2,000 note is valued at Rs 5 lakh among the racketeers.

Each 2,000 note is valued at Rs 5 lakh among the racketeers.

Kochi: Currency notes of Rs 2,000 denomination are being used by hawala rackets to transfer money illegally, the Central Economic Intelligence Bureau (CEIB) has reported. The Reserve Bank of India had withdrawn Rs 2,000 from circulation in October 2023. Hawala racketeers have fixed a token amount on Rs 2,000 currency notes for the safe money transfer. Each note is valued at Rs 5 lakh among the racketeers.

The hawala operators found the safe token system using Rs 2,000 currency notes following increasing incidents of couriers being robbed. The rolled-back notes are still being tendered in illegal businesses.
The CEIB reported that the parallel financial system of tendering Rs 2,000 notes was threatening the country's economic security. The 'token' system used for hawala transactions was revealed after Rs 2,000 currency notes were seized from Puducherry and Kasaragod in February this year.

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For instance, 20,000 currency notes of Rs 500 denomination had to be carried by road from Mangaluru to Kochi to complete a hawala transaction. It involved high chances of getting caught or robbed. Hawala operators made the innovative 'token' system to overcome the risks.
Under the token system, just two Rs 2,000 currency notes would be required to transfer Rs 10 lakh, and 20 notes to smuggle Rs 1 crore. The added advantage was that notes could be carried in the courier's wallet.

The serial numbers of the notes would be transferred to the receiver in advance. The courier would be provided a code number. Once the courier handed over the currency notes and the code number to the hawala racketeer at the destination, the latter would provide cash equal to the 'token' value of the notes. The 'token' system works based on trust.