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Parliamentary panel to quiz RBI governor Urjit Patel on demonetisation

business Updated: Jan 08, 2017 17:52 IST
Urjit Patel

RBI governor Urjit Patel at the Financial Stability and Development Council (FSDC) meeting at North Block in New Delhi,(PTI)

 A parliamentary committee has sent Reserve Bank of India governor Urjit Patel a list of questions on the demonetisation process and asked him to appear before it on January 20.

The public accounts committee has asked Patel to explain how the decision to recall Rs 500 and Rs 1,000 banknotes was taken and for details on its impact on the country’s economy, PAC chairman KV Thomas, also a senior member of the opposition Congress party, told Reuters.

Patel, under fire from some politicians over shortages of replacement currency and restrictions on depositing old notes that have caused long queues at banks and ATMs, is already set to testify before another parliamentary committee.

In December, the central bank unexpectedly kept its key policy rate unchanged at 6.25%, despite calls for action in the face of an intense cash shortage that threatens to slam the brakes on the world’s fastest-growing large economy. The bank was widely expected to cut the rate by at least 25 bps.

Pressure on the RBI and Patel has grown since Prime Minister Narendra Modi stunned the country on November 8 by abolishing the two high-value notes, removing 86% of the currency in circulation in a bid to crack down on the “shadow economy”.

The PAC asked Patel for details on the value of currency that has been returned to the bank, the quantity of “black money” it received and the amount of new currency released so far, Thomas said.

He added that the governor has also been asked about the country’s preparedness to handle cashless transactions.

“We had decided to call the RBI governor sometime in December but because the Prime Minister had asked for 50 days, we decided to postpone it to sometime January,” Thomas said. “We did not want to give it a political colour.”

Apart from Patel, the PAC has also called other finance ministry officials, including the revenue secretary and finance secretary, Thomas said.