Parliamentary committee criticizes RBI Governor for inability to answer questions on demonetization

New Delhi [India], Jan. 18 (ANI): Members of the Parliamentary Standing Committee on Finance on Wednesday criticized Reserve Bank of India Governor Urjit Patel for his inability to answer queries related to demonetisation. Patel was unable to tell us how much money has come back to the banks," said Saugata Roy, TMC MP. "The governor was unable to tell us that how much old currency has come into the banks," added Saugata Roy. Sources also quoted the RBI governor, as telling the Parliamentary Standing Committee on Finance that Rs.9.2 lakh crore in new currency has been introduced into the system. Patel briefed the parliamentary panel about demonetisation and its impact on the economy and the steps taken by the central bank to deal with the cash crunch. Besides, representatives of the Finance Ministry, including from the Department of Economic Affairs, Financial Services and Revenue, briefed the Standing Committee on Finance headed by former Union Minister and senior Congress leader M. Veerappa Moily. Representatives of Indian Banks Association (IBA), State Bank of India (SBI), Punjab National Bank (PNB) and Oriental Bank of Commerce (OBC) were also present in the meeting. It maybe recalled that the RBI had earlier given a seven-page reply to the questions raised by the committee. It had then said that it had received advisory instructions from the government to consider the demonetisation of Rs.500 and Rs.1,000 notes. According to the RBI, the government wanted it to consider demonetisation of high value currencies "to mitigate the triple problems of counterfeiting, terrorist financing and black money" on 7 November. The central board took a decision on this and the government announced the demonetisation on 8 November. The RBI had cleared the introduction of new Rs. 2,000 notes in May 2016 and that the central board had not discussed the ban of Rs. 500 and Rs. 1,000 notes in its meetings in May, July or August. The entire exercise of demonetisation has been mired in secrecy as neither the RBI and the government has given any details on when the decision was taken and who were involved in the process. The briefing by Patel and other bureaucrats before the Parliamentary panel assumes significance in this context. The RBI Governor is also scheduled to appear before the Public Accounts Committee of Parliament on the same issue on January 20. Prime Minister Narendra Modi had announced the demonetisation of old Rs. 500 and Rs. 1,000 notes on November 8 last year. Following the decision, the RBI had put restrictions on withdrawal of cash from ATMs as well as from banks to deal with shortage of new high denomination currency notes. This led to long queues at ATMs and bank branches. The cash situation has improved gradually with supply of new Rs.500 and Rs.2,000 notes. On Monday, the RBI increased the daily withdrawal limit from ATMs to Rs.10,000, though it kept the weekly ceiling at Rs.24,000. All over the country, banks had to deal with huge rush of people who thronged their branches to deposit the junked notes. The deadline for depositing old notes with banks ended on December 30. Finance ministry officials informed the committee about the pros and cons of demonetisation, starting early 2016. The meeting discussed issues about demonetisation of Indian currency notes of Rs. 500 and Rs. 1,000 and the impact thereafter. (ANI)