The Reserve Bank of India (RBI) had infused around 63% of the total banned currency notes after demonetisation, its Governor Urjit Patel told a parliamentary panel on Wednesday.
According to sources, the RBI governor, who briefed the parliamentary standing committee on finance on demonetisation, said the central bank had infused new currency notes worth around Rs 9.2 lakh crore into the system.
Currency notes worth around Rs 14.5 lakh crore were withdrawn when the Centre announced demonetisation on November 8, 2016.
Most members in the finance committee, including former Prime Minister Manmohan Singh and panel chairman M Veerappa Moily, spoke in favour of protecting the autonomy of the RBI as an institution but said that accountability from its governor must be sought as the note ban had impacted a large of number of people.
Though the members found Patel’s explanation lucid, they were miffed that he did not answer queries like how much money had been deposited in banks after demonetisation or by when the cash supply situation would ease across the country.
“Patel came across as a professional in his brief… but we had a lot of issues to raise,” said an Opposition member.
The finance committee meeting was significant as key finance ministry officials, including Economic Affairs Secretary Shaktikanta Das, Revenue Secretary Hasmukh Adhia and Financial Services Secretary Anjuli Chib Duggal also briefed the panel on monetary policy, including the note ban.
Representatives of the Indian Banks’ Association also briefed the panel.
As members sought to know if the government forced the RBI to suggest the note ban, both Das and Patel replied that the government had been discussing the issue with the central bank since early 2016.
However, while Das said such consultations started in May, Patel said discussions were initiated in January.
When a member asked why a joint secretary of the finance ministry had been deployed at the RBI to monitor the currency situation after demonetisation, Patel had no reply.
Sources said both the briefings were inconclusive and would resume after the first half of the Budget session of Parliament ended on February 9.
According to sources, the Opposition members asked a lot of questions related to the suffering of the people, the economy, job losses and the over 100 deaths attributed to the note ban.
In response to queries related to the preparedness of the banking system to deal with the impact of the note ban, RBI Deputy Governor S S Mundra said all the automated teller machines (around 200,000) were functional now.
Congress member Digvijaya Singh wanted a timeline on lifting of cash withdrawal limits.
“Patel could not answer how much money India business news had come back into the system and by when banks’ operations would be normal. RBI officials were defensive on demonetisation,” another Opposition lawmaker said.
How Manmohan Singh came to Patel’s rescue
Former Prime Minister Mamnohan Singh, also a former RBI governor, saved incumbent central bank chief Urjit Patel from a tricky query from an Opposition member. Sources said when a member asked Patel if there would be chaos if the government removed the current cash withdrawal limits, Singh said the RBI chief need not take that query. Sources said Singh is a reputed economist and respects other professionals. The former PM also noted that autonomy of the RBI as an institution must be protected. While the Centre recently increased cash withdrawal limits from Rs 4,500 to Rs 10,000 per day from the ATMs, the limits on pulling out money from the banks still remains. Congress has been asking for removal of these caps.
Parliament panel meet: Focal points
* RBI Governor Urjit Patel told a parliamentary panel the central bank has injected 63% of the total banned currency notes since Nov 8 demonetisation
* RBI has infused new currency notes of around Rs 9.2 lakh crore into the system
* Rs 14.5 lakh crore withdrawn from the system due to note ban
* Most panel members favoured protection of RBI’s autonomy
* Economic Affairs Secretary Shaktikanta Das, Financial Services Secretary Anjuly Chib Duggal also briefed the panel, besides representatives of the Indian Banks’ Association
* Both Das and Patel said the government had been discussing note ban with RBI since early-2016
* Officials would again brief the panel after Feb 9
* Opposition members asked questions related to dent in economy, job losses and the over 100 deaths attributed to note ban
* RBI Deputy Governor S S Mundra said all ATMs (around 200,000) are functional till date