RBI responds to panel on demonetisation: All you want to know about key events leading up to PM Narendra Modi announcement

By: |
Updated: January 10, 2017 2:33:00 PM

The Reserve Bank of India (RBI) has responded to the Parliamentary panel raising the demonetisation issue and clearly stated exactly what its role behind the note ban move was

 RBI indicated that it had acted upon the government's rationale to tackle the FICN risk.(Reuters)RBI indicated that it had acted upon the government?s rationale to tackle the FICN risk.(Reuters)

The Reserve Bank of India (RBI) has responded to the Parliamentary panel raising the demonetisation issue and clearly stated exactly what its role behind the note ban move was. At the basic level, RBI indicated that it had acted upon the government’s rationale to tackle the FICN risk. However, earlier statements from the government had stated that the decision to withdraw the 500 and 1000 rupees currency was a step that RBI recommended. The panel had prepared a questionnaire which the RBI responded to. Some of the questions asked were:

Q1. 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?

In its note, the RBI said: “It occurred to Government of India and the Reserve Bank that the introduction of new series of notes could provide a very rare and profound opportunity to tackle all the three problems of counterfeiting, terrorist financing and black money by demonetising the banknotes in high denominations of Rs 500 and Rs 1000. Though no firm decision was taken initially, whether to demonetise or not, preparations still went on for introduction of new series notes….”

You may also like to watch:

Q2. 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?
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to Central Government that the legal tender status of the banknotes in the high denominations of Rs 500 and Rs 1000 be withdrawn.” That same evening, Prime Minister Narendra Modi addressed the nation and announced the decision to withdraw the notes effective midnight November 8.

Q3. *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?
According to the 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 demonetisation of high value notes.

Q4. *What was the exact rationale laid out by the RBI for this decision to invalidate Rs 500 and Rs 1,000 notes overnight?
“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.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition