RBI must focus on speedy re-monetisation
It is good that the Reserve Bank of India (RBI) has withdrawn its directive to banks to demand an explanation from all customers who wish to deposit more than Rs5,000 in the demonetised notes. The people are facing enough conveniences following the Government's demonetisation decision since November 8-9 midnight, and there really was no need for the RBI to add to the misery. The central bank may well have had reasons to impose the new rule, but surely those could not have been so compelling as to enhance the woes of customers. After all, the Government had earlier unambiguously stipulated that people could deposit the demonetised notes in the banks until December 30, and there had been no riders to that decision. To have suddenly imposed conditions, was unfair. The RBI's rollback was obviously prompted by the public outcry as well as the belief that the central bank was going on its assurance of alleviating the problems customers were facing. It is possible that the Union Government had stepped in to nudge the RBI to review the directive.
Union Minister for Finance Arun Jaitley said clearly that no questions would be asked to customers who made one-time deposits. A Bharatiya Janata Party functionary credited Jaitley for the rollback. Now that the RBI has clarified that depositors, who are covered under the Know Your Customer (KYC) ambit, would not be queried, a majority of those who hold bank accounts — with nearly 70 of them being KYC-compliant — will feel relieved. The worrying part is that the RBI seemed to have followed a path which was at divergence with that of the Centre's stated objective of ending people's inconvenience. Prime Minister Narendra Modi has promised that things would begin return to normal after December 30, when the window for the deposit of demonetised notes at the banks, closes. New rules and directives from the central bank every other day confuse both the customers and the banks which are already harried by the situation. It's not the RBI but bank officials that face the public brunt, and they don't deserve such treatment. Ever since the demonetisation decision came into effect, bank employees have been working tirelessly to cope with the situation. Their patience must also be running thin; a bunch of bank employees had even threatened a mass disobedience movement following the RBI old directive. After all, how does one expect bank officials to ‘interrogate' customers over the deposit of more than Rs5,000 in old denominationsIJ
Meanwhile, both the BJP-led Government and the RBI need to demonstrate greater coordination in managing the post-demonetisation situation. This is especially crucial for the BJP which will face the people in elections to various States in the coming months. So far, results to a clutch of local body polls in certain States have been good for the party, but the possibility of public anger spilling over into the ballot box, if the inconveniences are not reduced — if not altogether eliminated — in the coming weeks. The Prime Minister has received ringing endorsement for his courageous decision to demonetise in a bid to tackle black money, corruption and terror funding. That decision is done with; re-monetisation is the new challenge.