Is RBI the biggest failure of demonetisation?

By: |
New Delhi | Updated: December 21, 2016 4:30 PM

At the risk of losing people's faith, the RBI has changed a regulation almost once in three days since November 8.

rbi,reserve bank of india, rbi u-turn, rbi deposit limit, urjit patel, narendra modi, modi government, demonetisation impact, demonetisation effect, rbi news, economy of india‬, united kingdom‬‬, kyc means, cash deposit limit, rbi regulation, rbi notification, rbi notification today, new rbi guidelines, rbi new notification, rbi circular, rbi latest notification, latest rbi notificationWhen demonetisation dust settles, one would hope that RBI doesn’t become the biggest failure of note ban or as someone has joked — the Reverse Bank of India.

The frequent flip flops in regulations on withdrawals, exchange and deposits by the Reserve Bank of India (RBI) after demonetisation are shocking. At the risk of losing people’s faith, the Central bank has changed a regulation almost once in three days since November 8.

Under attack for the December 19 regulation that put a number of restrictions on deposits over Rs 5000 in banned currency notes of Rs 500 and Rs 1000 until December 30, the RBI did a U-turn today and removed all restrictions on deposits in KYC-compliant accounts.

In the previous regulation, the RBI had said that a person can deposit more than Rs 5000 in banned notes only once until December 30. It also asked banks to ask the person depositing over Rs 5000 as to why s/he was not able to do so earlier. The regulation surprised many as the Central bank had been telling people to remain patient and exchange their old notes at their convenience anytime before December 30.

ALSO READ RBI Buckles Under Pressure, Withdraws Rs 5,000 Deposit Limit


Faith in RBI keeps the country’s economy running. However, with frequent changes in regulations, the RBI has not only shaken people’s faith in the institution but also left many of them confused.

It is apparent that today’s U-turn by the RBI was done under political pressure as Modi government was facing serious criticism over deposit restrictions from across the country.

One may argue that RBI changed regulations frequently to keep shocking the money launderers. But it cannot be forgotten that by not sticking to its own regulations, the Central bank ended frequently increasing people’s troubles due to demonetisation.

After Demonetisation, Property Market Lures With Freebies


Ever since the announcement of note ban by Prime Minister Narendra Modi on November 8, RBI chief Urjit Patel has been accused by the opposition of undermining the autonomy of the Central bank by colluding with the government. While the opposition’s claim may be argued, it is certain that RBI has exposed its incompetence in handling a situation like note ban.

Demonetisation has introduced a chaos in the country’s economy. It is still too early to conclude which sector has been hit the most. But when the dust would settle, one hopes that RBI doesn’t end up as the biggest failure of demonetisation or as someone has joked — the Reverse Bank of India.

Do you know What is India expected to grow 10 pc during current fiscal: NCAER Director General Poonam Gupt,FinMin releases Rs 9,871 cr grant to 17 state, Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Gross direct tax collections up 68% till Nov 23, refunds slow
2DBT savings: Rs 2.23L cr & counting
3Job creation under govt schemes declines