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Talks with govt on demonetisation began early last year: RBI

business Updated: Jan 18, 2017 18:44 IST

An Indian visitor (R) receives cash from a bank employee after withdrawing money from his bank account with his Aadhaar or Unique Identification (UID) card during a Digi Dhan Mela, held to promote digital payment, in Hyderabad.(AFP)

Urjit Patel, the Reserve Bank of India (RBI) Governor Urjit Patel told the “parliamentary panel on demonetisation” the central bank started engaging with the government on the note ban -- which resulted in the world’s largest cash crunch ever -- in early 2016.

The meeting was held to discuss the “demonetisation of the currency notes of Rs 500 and Rs 1,000 and the impact thereof”.

Sources said that the Congress members of the committee asked questions on whose decision was it to withdraw high currency notes that caused the world’s biggest cash crunch. The members also asked “autonomy of RBI”, which has been questioned by former RBI governors such as Y.V. Reddy and Bimal Jalan, and Nobel laureate Amartya Sen.

BJP members of the panel, headed by Congress leader Veerappa Moily, however, chose not to raise much questions during the meeting, the sources added.

The questions put up by the panel ranged from the total amount of money that came back during the demonetisation period, the total amount of new bills of Rs 500 and Rs 2,000 that were printed, what how much was sent to the banks for remonetisation.

Sources also said that former prime minister Manmohan Singh, who has described demonetisation as monumental management failure, raised many questions during the discussion.

The Finance Ministry has sought time from the panel to provide answers to the queries raised during the meeting. The Finance Secretary made a presentation before the committee, to which the panel members wern’t too satisfied.

Patel is also scheduled to appear before the Public Accounts Committee of Parliament on the same issue on January 20.