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Note ban: Parliamentary panel seeks explanation from RBI on flip flops, secrecy

A parliamentary panel has asked RBI Governor Urjit Patel to appear before it on January 28 and provide it answers to 10 probing questions on the demonetisation issue.
India TV Politics Desk New Delhi January 08, 2017 7:59 IST
India TV Politics Desk

A parliamentary panel has asked RBI Governor Urjit Patel to appear before it on January 28 and provide it answers to 10 probing questions on the demonetisation issue. The questionnaire was sent to Urjit Patel on December 30 by Congress leader K V Thomas-led Public Accounts Committee (PAC) asking questions on the issue, the Indian Express reported.

The Reserve Bank of India have come under intense criticism for only playing as a rubber stamp in government's decision to demonetise Rs 500 and Rs 1000 notes and later on its frequent changing of withdrawal and deposit rules.

The RBI’s reluctance to share information in response to RTI queries has also been no only worsened the situation with many questioning the central bank’s autonomy in the entire exercise.

According to a report by the daily, the panel has sought answers on RBI’s role in decision-making process of demonetisation, its impact on the economy and central bank’s “flip-flops” in regulations over the last two months.

Here are the 10 questions sent by the panel to RBI:

1. Union Minister Piyush Goyal has said on the floor of the House that the decision to demonetise was taken by the RBI and its Board. The government merely acted upon this advice. Do you concur?

2. If the decision was indeed RBI’s, then when exactly did the RBI decide that it was in India’s best interests to demonetise currency?

3. What was the exact rationale laid out by the RBI for this decision to invalidate Rs 500 and Rs 1,000 notes overnight?

4. RBI’s own estimates show fake/ counterfeit currency to be a mere Rs 500 crore. India’s cash to GDP was 12%, lower than Japan (18%) and Switzerland (13%). High denomination notes as a share of currency was 86% in India, but 90% in China and 81% in US. So, what was so alarming that the RBI decided India needed to demonetise suddenly?

5. When was the notice sent to the RBI Board members calling for an emergency meeting on November 8? Which of them attended this meeting? How long the meeting did last? And where are the minutes of this meeting?

6. In the subsequent note sent to the Cabinet recommending demonetisation, did the RBI explicitly mention that this decision would mean invalidating 86 per cent of the country’s currency and its attendant cost? How long did the RBI say it would take to remonetise?

7. The RBI notification of November 8, 2016 under Section 3 c(v) issued a restriction on withdrawal from a bank account over the counter to Rs 10,000 per day and Rs 20,000 per week. There was a similar limit of Rs 2,000 per day in an ATM. Under what law and powers of the RBI, were these limitations imposed on people to withdraw their own cash? What gave the powers to the RBI to ration currency notes in the country? If there are no laws that you can cite, why should you not be prosecuted and removed for abuse of power of office?

8. Why have there been so many flip-flops in RBI regulations over the past two months? Please give us the name of the RBI officer who came up with the idea to ink people for withdrawal? Who drafted the notification on marriage related withdrawal? If it was not the RBI that drafted these but the government, is the RBI now a department of Ministry of Finance?

9. How much exactly was demonetised and how much has been deposited back in old currency? What was the expectation of notes to be extinguished when the RBI advised the government to demonetise on November 8?

10. Why has the RBI refused to reveal information under the RTI, citing inane reasons such as fear of personal injury? Why is the RBI not providing information under RTI to queries that come?

The PAC has also summoned senior Finance Ministry officials to depose before it on January 28. However, three top secretaries from the ministry, Department of Economic Affairs Secretary Shaktikanta Das, Revenue Secretary Hasmukh Adhia and Financial Services Secretary Anjuly Chib Duggal one by one have asked the panel to reschedule the meeting. The officials have cited preparations for the Budget which is to be presented on Feb 1.

The panel has declined their request but has now decided to call them one by one instead of calling them together.

On Friday, Patel was questioned by the Rajya Sabha Standing Committee on Subordinate Legislation.  RBI Deputy Governors N S Vishwanathan and R Gandhi also deposed before the committee.