RBI Board ‘advised’ to approve demonetisation at day’s notice

New Delhi, Jan 18 (IANS) In a revelation about how the crucial decision on demonetisation of Rs 1,000 and Rs 500 notes was taken by the Reserve Bank of India (RBI) at a day’s notice, RBI Governor Urjit Patel on Wednesday told a Parliamentary Committee that the apex bank had been “advised” by the government on November 7 to hold a board meeting on the issue.

Sources told IANS that Patel was asked several questions by opposition MPs on demonetisation. Answering one such query, Patel said the government had advised that the central board of the Reserve Bank may consider withdrawing legal tender status of high denomination notes of Rs 1,000 and Rs 500.

The demonetisation decision was announced by Prime Minister Narendra Modi on November 8 following a meeting of the RBI board and also of the union cabinet.

Patel is learnt to have told the committee that the bank was in talks with the government on demonetisation since early last year.

Patel was also asked about the value of demonetised currency which has come back to the banks, and is learnt to have said that the committee will be apprised of the figure in due course.

He was also asked about withdrawal limit of Rs 24,000 per week. The committee is likely to get written answers to some of the questions raised on Wednesday and Patel may again appear before the committee next month.

Opposition parties have severely criticised the government over the manner in which the decision has been implemented.

BJP MP Nishikant Dubey, a member of the committee, told IANS that at the Wednesday meeting, former Prime Minister Manmohan Singh defended the RBI Governor by suggesting to him not to answer Congress leader Digvijay Singh’s query on whether there could be chaos if the existing restrictions on cash withdrawals are removed.

“Yes, he (Manmohan Singh) did help the RBI governor (on the issue) but the remarks were removed from the minutes,” Dubey said.

Earlier, Patel also told the Standing Committee on Finance that Rs 9.2 lakh crore of new currency notes have been put in circulation since the high-value currency notes were demonetised on November 8.

The RBI has still not declared how much of the Rs 15.44 lakh crore in banned notes has been returned to the banks.

–IANS

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