The Reserve Bank had “kept ready” a reasonable stock of new Rs 500 and Rs 2,000 notes before the announcement of demonetisation on November 8 by Prime Minister Narendra Modi. However, no records of discussion between the RBI and the government on demonetisation were maintained because of secrecy, RBI Governor Urjit Patel has told a Parliamentary Standing Committee on Finance. While keeping the “secrecy in mind”, the RBI did all it could to make the transition process to replace the invalid currency least disruptive and to see that the inconvenience to the public is addressed as far as possible, he said.
“Critical factors, such as installed capacity for printing and other resources viz availability/expected the supply of inputs, like bank note paper, ink, logistics requirements etc were factored in and was shared and discussed with the government periodically,” Patel said in a written reply. “The arrangement for printing of new notes of Rs 2,000 and Rs 500 was started months back taking into the account all critical factors. By the date of the announcement, a reasonable amount of newly designed notes had already been printed and kept ready,” he said.
The government had withdrawn old Rs 500/1000 notes on November 9 last year with an aim to check black money, terror financing and counterfeit currency. The move had taken about 86 per cent of the currency out of circulation, leading to a huge shortage of cash. RBI informed the parliamentarians that as on November 8, there were 17,165 million pieces of Rs 500 and 6,858 pieces of Rs 1,000 notes in circulation aggregating Rs 15.44 lakh crore.
Patel also said discussions between the government and the central bank had started in early 2016 when Raghuram Rajan was the RBI Governor. On the details of a conversation between Rajan and the government on demonetisation, Patel said: “No such minutes of conversation with the previous RBI Governor are on record.”