The Reserve Bank of India (RBI) has introduced Rs9.2 lakh crore worth of new currency notes into the banking system, but nearly three weeks after the deadline for depositing the scrapped high-value currency ended on December 30, the Central bank is still counting the demonetised notes.
RBI Governor Urjit Patel’s submission before the Parliamentary Standing Committee on Finance on Wednesday reportedly did not go well as most members wondered how the Central bank could remain “clueless” about the amount of demonetised currency deposited for so long, said top panel sources.
Interestingly, a month after the Government announced demonetisation on November 8, RBI’s Deputy Governor R Gandhi on December 13 had said a total of Rs12.44 lakh crore out of Rs15.44 lakh crore of banned notes had been put back into the Central bank chest till December 10. It means that the RBI had taken just three days to compile the deposits received from banks across the country.
Trinamool Congress MP Saugata Roy, who is a member of the panel, expressed his dismay over Patel’s submission. “The RBI Governor was not able to tell us how much money has come back to the banks, nor was he able to tell us when the system will be normal. The RBI officials were defensive,” Roy told reporters.
Sources said the Governor was spared a tough grilling as senior MPs, including former Prime Minister Manmohan Singh, intervened to say that the RBI as an institution needs to be respected.
Though Congress MPs like Digvijay Singh wanted Patel to be specific in his replies on lifting of cash withdrawal restrictions and wanted to follow through with tougher questions, they were prevented by Singh and others from doing so.
Sources said Patel is also reported to have told the panel that Rs9.2 lakh crore worth of new Rs500 and Rs2,000 notes have been put into the system since demonetisation was announced.
Asked when the demonetisation process began, Patel added, “The talks for scrapping old high value currency of Rs1,000 and Rs500 were held between the Central bank and the Government in January 2016.” He also informed that the RBI’s Board took the demonetisation decision on November 8 on an “advice” given by the Government a day earlier.
However, a panel member said, “Patel is yet to answer many questions about the conception and planning of demonetisation. When was the idea broachedIJ How long was it plannedIJ Was the RBI’s Board given enough time to consider itIJ Was the decision unanimousIJ The Central bank Governor could not give satisfactory answers to the members present in the panel.”
According to sources, the Finance Ministry has sought time from the panel to provide answers to the queries raised during the meeting in which the Finance Secretary made a presentation before the committee. “But the panel members seemed not too satisfied with the replies,” sources added.
The first time the RBI gave a break-up of new notes was on December 7 during the monetary policy review Press conference where R Gandhi said that a total of Rs4 lakh crore in new notes had been circulated till December 6, of which 19.1 billion notes worth Rs1.06 lakh crore were in small denominations of up to Rs100 and the rest, Rs2.94 lakh crore were in high denominations of Rs500 and Rs2,000.
Again on December 19, the Central bank disclosed another figure of new notes circulated. It said 20.4 billion small denominations (up to Rs100) and 2.2 billion of high currency notes of Rs500 and Rs2,000 had been circulated.
This was equivalent to a total of Rs5.93 lakh crore.
The RBI Governor, flanked by Deputy Governors SS Mundra and Gandhi, briefed the parliamentary panel about demonetisation, its impact on the economy, and the steps taken by the Central bank to deal with the cash crunch following the withdrawal of Rs500 and Rs1,000 notes.
Those who appeared before the committee in the meeting include Economic Affairs Secretary Shaktikanta Das, Banking Secretary Anjuly Chib Duggal and Revenue Secretary Hasmukh Adhia, top bank honchos like Chanda Kochhar of the ICICI Bank and Usha Ananthasubramanian of the Punjab National Bank.
The crucial meeting was held to discuss the fallout of demonetisation of high value currency notes of Rs500 and Rs1,000, and the impact thereof. Patel is also scheduled to appear before the Public Accounts Committee of Parliament on the same issue on January 20.