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The Continuing Note Ban Saga

Note ban: Stormy PAC as BJP, Congress spar; Urjit Patel, RBI have no answers to key questions.

Parliament’s Public Accounts Committee (PAC) headed by Congress leader KV Thomas on Friday failed to get clear answers to crucial questions over demonetisation from the Reserve Bank of India and its governor Urjit Patel even as the members belonging to BJP and Congress in the panel had heated exchange over the grilling.

According to a PTI report, the RBI told the PAC it does not know the “exact number” of junked currency notes that were in circulation and it is still “reconciling” the number of notes that were deposited back. It is to be remembered that more 72 days have passed after prime minister Narendra Modi announced demonetisation of Rs 500 and Rs 1,000 notes.

“The exact number of Specified Bank Notes (SBNs) withdrawn from circulation is being worked out,” the central bank said in a written submission to the PAC.

On 2 December, Minister of State for Finance Arjun Ram Meghwal had, however, told Parliament in a written response that currency notes worth Rs 15.44 lakh crore (17165 million pieces of 500 notes and 6858 million pieces of 1000 notes) were in circulation on November 8, when the demonetisation was announced.

RBI Governor Urjit Patel along with Deputy Governor R Gandhi and other senior functionaries appeared before the PAC, headed by former union minister and senior Congress leader K V Thomas, for oral evidence on ‘Review of Monetary Policy’.

Sources told PTI the RBI was asked about the “total number” of the scrapped currency deposited in banks after November 8.

In its reply, RBI is understood to have informed PAC that the exchange of the currency took place at thousands of bank branches and post offices over the 50 days demonetisation period. The collected notes were deposited in 4,000 currency chests.

“It (number of notes) is pending finalisation as of now, as physical verification and reconciliation are underway,” said the sources quoting the RBI’s reply.

RBI informed the panel that its Board meeting which recommended withdrawal of legal tender of Rs 500/1000 notes was held on November 8 at 5.30 pm.

The prime minister announced about the demonetisation in his address to the nation at 8 pm on the same day after Cabinet’s approval.

The Members of Parliament in the PAC were also informed by the RBI that the matter related to demonetisation was under discussion between the government and the RBI for “some months”, following which the proposal was placed before the Central Board of RBI on November 8 for consideration.

The Board recommended the proposal to the government.

The Board meeting was attended by Governor Patel, two Deputy Governors (R Gandhi and S S Mundra), and five Directors of RBI — Nachiket Mor, Bharat N Doshi, Sudhir Mankad, Shaktikanta Das and Anjuly Chib Duggal.

Sources said another director N S Vishwanathan (Deputy Governor) did not attend the meeting as he stayed back in Mumbai for “strategic reasons” to brief the bankers first hand immediately after the decision on demonetisation was taken.

Another director, Natarajan Chandrasekaran was abroad at the time of the meeting.

Meanwhile, media reports said PAC head’s introductory remarks kicked off a heated war of words between the BJP and Congress members of the committee.

Thomas, according to the reports, started off listing out the hardships the common man faced in the aftermath of the note ban to which BJP members Bhupender Yadav, Kirit Somaiya and Nishikant Dubey protested.

The BJP members also said that questions to the RBI governor should be on monetary policy and not outside it. Dubey has been quoted as saying in a report in the DNA that the ban on Rs 500 and Rs 1,000 undertaken by the government does not strictly fall under the monetary policy decisions of the RBI.

The opposition members, including Thomas, have expressed disappointment that Patel did not give clear answers to crucial questions.

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