Bjp Government Advised RBI to Ban Note RBI Gave Permission

Bjp Government Advised RBI to Ban Note  and RBI Gave Permission

Raghuram Rajan was Governor when the proposal to introduce new Rs 2,000 notes was approved by the RBI board in May last year.

Rajan completed his three-year term as RBI Governor on September 4, 2016 and Urjit Patel assumed charge as Governor the next day.

The RBI, in the RTI reply, also declined to provide any comment on whether the then Governor Raghuram Rajan had sent any letter or communication to the government against withdrawing Rs 500 notes in 2016 before his term ended in September 2016.

Indian express reported that “Government, on 7th November, 2016, advised the Reserve Bank that to mitigate the triple problems of counterfeiting, terrorist financing and black money, the Central Board of the Reserve Bank may consider withdrawal of the legal tender status of the notes in high denominations of Rs 500 and Rs 1,000,” said the RBI in a seven-page note submitted on December 22 to the Parliament’s Department Related Committee of Finance headed by Congress Leader M Veerappa Moily.

According to RBI’s note, accessed by The Indian Express, the RBI Central Board met the very next day to “consider the Government’s advice,” and after “deliberations,” decided to recommend to Central Government that the legal tender status of the banknotes in the high denominations of Rs 500 and Rs 1000 be withdrawn.” The Government “considered the recommendations” and decided to withdraw the notes. That same evening, Prime Minister Narendra Modi addressed the nation and announced the decision to withdraw the notes effective midnight November 8.

Eight days later, during a debate on demonetization in the Rajya Sabha, Union Minister for Power, Coal, New and Renewable Energy Piyush Goyal said that the decision to demonetize was taken by the RBI Board.

Between May and June Government and RBI both agreed to introduce currency notes of Rs. 2000.

RBI, on May 27, 2016, recommended to Government that a new series of bank notes with new designs, sizes, colors and themes including notes in the new Rs 2,000 denomination be introduced. The Government gave their final approval on June 7, 2016 and, accordingly, the presses were advised in June 2016 to initiate production of new series notes.

RBI data shows that as of November 8, 2016, when the PM announced the decision to ban currency notes of Rs. 500 and Rs.1000 the stock of Rs 2000 notes at the RBI and currency chests was only Rs 94,660 crore, barely six per cent of the total value of Rs 15 lakh crore withdrawn with the demonetization decision.

In its Right to Information (RTI) reply to an application filed by The Indian Express, the RBI said the Central Board discussed and approved the proposal to introduce Rs 2,000 notes on May 19 last year.

To a specific question on whether there was a discussion on a possible withdrawal of legal tender of the Rs 500 and Rs 1,000 notes at any of the board meetings of the RBI last year, the RBI said that this was not discussed during the May 2016 Board meeting or the subsequent Board meetings on July 7 and August 11.

On a specific query about whether the RBI Central Board received any proposal to demonetize Rs 500 and Rs 1,000 notes from the government, the RBI said in another RTI reply, “the Central Board of Reserve Bank of India in its meeting held on November 8, 2016, recommended the proposal to withdraw legal tender character of 500 and 1000 rupee notes to the Central Government.’’

As per RTI reply to The Indian Express, Governor Urjit Patel, Deputy Governors R Gandhi, SS Mundra, Shaktikanta Das, Secretary, Dept of Economic Affairs, DFS Secretary Anjuly Chib Duggal, Bharat Doshi, Nachiket Mor and former bureaucrat, Sudhir Mankad were present at the November 8, 2016 board meeting which cleared the demonetization of high value notes.

Suggested Reading –

Cleared Rs 2000 note in May, no talk then on 500, 1000: RBI

Demonetization: On Nov 7, it was Govt which ‘advised’ RBI to ‘consider’ note ban, got RBI nod next day


Reality views by sm –

Tuesday, January 10, 2017

Tags – Note Ban RBI Meeting Rajan Patel Modi