Cash flow to be normal soon, cut in online charges: Patel

New Delhi, Jan 20 (IANS) Cash flow, restricted post-demonetisation, will normalise soon but might take longer in rural and remote areas, Reserve Bank of India (RBI) Governor Urjit Patel informed a parliamentary panel on Friday.

He further asserted that demonetisation would be beneficial for the economy in the medium- and long-term.

Patel told the Public Accounts Committee (PAC) of Parliament that the situation of cash flow in the country was “almost normal” in urban areas, informed sources said.

When panel members expressed concern over online transactions charges, Patel told them that RBI was trying to come out with a new mechanism to bring down online transaction costs, and was in talks with all stakeholders, including banks and service providers, the sources said.

He added that efforts were on to improve cash flow to rural and remote areas in the country.

“It will take a few more weeks for the situation to improve in rural and remote areas,” the sources quoted him as saying.

Prime Minister Narendra Modi had on November 8 last year announced demonetisation of Rs 500 and Rs 1,000 currency notes, saying the move was aimed against black money, counterfeit currency and terror financing.

Asked by the members about multi-fold increase in deposits in cooperative banks following demonetisation, Patel is learnt to have said the matter was being probed by Financial Intelligence Unit-India (FIU-IND).

Earlier this week, the RBI Governor had told the Parliamentary Standing Committee on Finance that new currency notes, worth Rs 9.2 lakh crore, were introduced into the financial system post-demonetisation.

The issue of demonetisation was mentioned by PAC Chairman K.V. Thomas in his initial remarks but a BJP member objected to it, saying the agenda of the meeting was “review of monetary policy”.

The member said the demonetisaion of legal tender comes under the RBI Act, while Monetary Policy falls under the purview of the Finance Act.

“So, demonetisation issue can’t be discussed,” he said.

Following this, Patel gave panel members an overview of the world economy with special reference to the United States and China and mentioned the impact of Britain’s exit from the European Union.

Thomas later told reporters that the committee will meet again on February 10 to discuss the demonetisation issue with Finance Ministry officials.

He added that the RBI Governor could be called again, if required, after February 10.

Apart from Patel, Deputy Governor R. Gandhi and other senior functionaries of the RBI also appeared before the PAC.