CORPORATE Pakistan reacted sharply to a piece of information suggesting that the government intends to introduce a currency note of Rs10,000.

“We will oppose this move tooth and nail. It will increase the space for tax evaders and increase tax burden on the tax compliant citizens [salaried class] and corporate entities. If at all, the government needs to do away with the Rs5,000 note to discourage cash dealings of asset owning classes and improve documentation in a country where the tax-to-GDP ratio is a dismal 8-9pc,” a business leader told Dawn.

Traders and realtors, however, found the suggestion to introduce higher denomination currency notes logical. They considered it an appropriate official response to an evolving market. They argued it would help expand economic activity by facilitating dealings in key sectors where operators prefer cash transactions.

“Visit any wholesale market in any city to witness bagful of money changing hands all day long. A Rs10,000 note will cut counting time and reduce the volume of currency that has to be carried on a daily basis. A ring [a bundle of 10 packets of 100 fresh notes] of fresh bills will value a khoka [Rs10 million in market idiom of Karachi],” said a leading trader.

“In the current day and age when prices are running through the roof, Rs10/20 notes are worthless, and should be replaced by Rs2,000 and Rs10,000 notes,” he added.

“Anyone who has bought or sold a property knows that two receipts are made for every deal. The bank draft normally covers the payment of the official receipt that is entered in the record of the relevant land registration department. It reflects a fraction of the actual value of a transaction. The rest, a major chunk of payment, is often in cash,” a property tycoon commented.

“A high denomination note is the need of time, especially given the bad security situation and with all kinds of ‘bhatta’ and crime gangs operating in the country,” he aired his views.

The hierarchy in the ministry of finance and the State Bank of Pakistan (SBP) rubbished the information regarding the new currency note, and said it was baseless. They termed the statement attributed to Finance Minister Ishaq Dar during a talk show on a private channel ‘a figment of someone’s imagination’.

In a written response to a query in this regard, the SBP mailed back the following.

“We have neither received any intent of the government for introduction of Rs10,000 banknote, nor its issuance has been discussed or considered by the SBP to-date. As per provision of the SBP Act 1956, ‘bank notes made and issued by the bank shall be in such denominations and of such design, form and material as may be approved by the Federal Government on the recommendations of the Central Board’.”

Rana Asad Amin, advisor to the finance division and the spokesperson for the federal finance ministry, categorically denied even discussing the issue in the relevant circles. “It is a rumour that I deny completely,” he told Dawn over phone from Islamabad.

Sources in commercial banks, however, confirmed that they did conduct a survey a few months back at the behest of the central bank to seek public opinion on the issue. A bank manager mailed the said survey form to this writer.

The form, titled ‘public opinion on banknotes,’ in all contained 13 questions. A question regarding addition of new denomination notes included Rs10,000 as an option.

“From what I know, most people ticked option (a) Rs2,000 in response to question 6 in the form, which inquired about the issue of new notes,” a lady manager working in one of the branches involved in the survey exercise of the SBP told this scribe.

Some 41 branches of Allied Bank, 71 of HBL, 58 of MCB, 70 of NBP, and 60 of UBL were identified by the State Bank across the country for the survey, according to the circular no.CMD/114/2(4) G-2013, issued on May 3, 2013.

When contacted, a senior member of the Federal Board of Revenue tried to underplay the significance of a possible happening. “What’s the big deal?

See, Rs10,000 is the equivalent of $100 only. The media needs to desist from making an issue out of everything,” the gentleman who commands respect in bureaucratic circles told Dawn privately.

However, when quizzed about its implication on revenue generation and the expressed policy of the government to promote documentation of the economy, the said officer requested some time to articulate a formal response, but that was not to happen.

“Any move to introduce higher denomination currency will be counterproductive to any government effort to increase documentation to ensure an even playing field,” Abdul Aleem, secretary general of the Overseas Investors Chamber of Commerce and Industry, said over phone.

Saad Ammanullah, an enlightened corporate executive active in various business forums said, “I do not believe the government can do something so damaging. If you can’t track it, you can’t tax it”.

A former governor of the SBP told this writer in confidence that the central bank opposed issuance of the Rs5,000 note back in 2006, but the federal finance ministry prevailed in the end.