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Demonetisation: RBI’s Urjit Patel fails to answer queries on deposited banknotes

The RBI has injected Rs 9.2 lakh crore worth of new currency notes into the banking system to help replace the notes banned in November, a parliamentary source quoted central bank governor Urjit Patel as saying.

black money crackdown Updated: Jan 18, 2017 21:58 IST
Agencies
Reserve Bank of India governor Urjit Patel addresses the Vibrant Gujarat Sumit 2017 in Gandhinagar .
Reserve Bank of India governor Urjit Patel addresses the Vibrant Gujarat Sumit 2017 in Gandhinagar .(PTI File)

The Reserve Bank of India (RBI) has injected Rs 9.2 lakh crore worth of new currency notes into the banking system to help replace the banknotes banned in November, a parliamentary source quoted central bank governor Urjit Patel as saying on Wednesday.

Patel, however, failed to provide any figure for how many of the banned notes had been deposited into the banking system and he did not provide clarity on when the cash situation would become normal.

Patel met a parliamentary panel on finance to answer questions about the Narendra Modi government’s move to abolish old notes, or 86% of the currency then in circulation, in a bid to unearth unaccounted money.

About Rs 15.4 lakh crore worth 500- and 1,000-rupee notes were removed from circulation after the November 8 announcement by the government.

“Patel was unable to tell us how much money has come back to the banks,” Trinamool Congress MP Saugata Roy, a member of the panel, was quoted as saying by news agency ANI.

Read | Congress to protest at RBI offices in 2nd phase of anti-demonetisation stir

The RBI governor also informed the parliamentary panel that consultations between the government and the central bank on demonetisation had began in January 2016, a source told Reuters.

However, the government notified the RBI it wanted specifically to scrap 500- and 1,000-rupee notes on November 7, a day before the RBI board formally approved the recommendation, the member said, citing a note sent to the panel by the central bank.

Senior bureaucrats, including department of economic affairs secretary Shaktikant Das, banking secretary Anjuly Chib Duggal and revenue secretary Hasmukh Adhia, and top banking honchos such as Chanda Kochhar of ICICI Bank and Usha Ananthasubramanian of the Punjab National Bank were to appear before the committee.

Former Prime Minister Manmohan Singh is one of the members of the panel, headed by Congress leader Veerappa Moily.

The RBI governor was also scheduled to appear before the Public Accounts Committee of Parliament on the same issue on January 20.

Read | Demonetisation woes: Too many vegetables, too little cash hits sellers hard

PM Modi’s surprise announcement to scrap the banknotes sparked chaos and confusion across the country, with millions of consumers queued outside banks and ATMs to change a limited number of old notes for new ones or withdraw cash.

The government said the move was aimed at rooting out black money and corruption, but met with stiff resistance from opposition parties, which alleged the implementation of the programme was faulty and blamed the government for close to 100 deaths reported after the shock announcement.

On Wednesday, Congress leader Ghulam Nabi Azad said the RBI’s autonomy had taken a hit in the wake of the move and asked for Patel’s resignation.

The International Monetary Fund (IMF) had cut a full percentage point off India’s GDP growth forecast, to 6.6%, in the fiscal year that ends in March 2017, citing the blow to the cash-reliant economy.

The IMF also trimmed the growth outlook for the fiscal year 2017/18 to 7.2% from 7.6% estimated earlier.

Read | Modi turned India into Hiroshima, Nagasaki with demonetisation bomb: Shiv Sena