RBI Had Objections To Notes Ban, Agreed In "Public Interest", Reveals RTI

[timmy]

 

@Mitron @Kool_SRG 

[timmy]

RBI Had Objections To Notes Ban, Agreed In "Public Interest", Reveals RTI

বাংলায় পড়ুন

The central bank board had met just about 2.5 hours before PM Modi's sudden announcement in a televised address to the nation

All India | Reported by Purva Chitnis, Edited by Deepshikha Ghosh | Updated: March 11, 2019 17:57 IST

 

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The RBI approval was sent to the government weeks later, on December 16. (File)

 

NEW DELHI: 

HIGHLIGHTS

1. RBI board had listed 4 objections to notes ban, RTI reply reveals
2. RBI board had met just about 2.5 hours before notes ban announcement
3. The ban was announced even before the board's approval

 

 

The Reserve Bank of India (RBI) board had warned about the short-term negative effect of demonetization on growth and had noted that it would have no material impact on the campaign against black money. The central bank had listed four objections to the overnight notes ban announced by Prime Minister Narendra Modi before agreeing to it "in larger public interest", an RTI reply has revealed.

The central bank board had met just about 2.5 hours before PM Modi's sudden announcement in a televised address to the nation on November 8, 2016. The ban of Rs. 500 and 1,000 notes, which wiped out 86 per cent of the cash in circulation, was announced even before the board's approval.

The approval was sent to the government five weeks later, on December 16, and the RBI had recorded its objections to most of the government's arguments for banning high value notes.

According to the minutes of the RBI meeting, shared in response to the Right To Information (RTI) query, the directors had noted that it was a "commendable measure" but would have a short term negative effect on the GDP "for the current year".

Then RBI Governor Urjit Patel, and the man who succeeded him as central bank chief -- Economic Affairs Secretary Shaktikanta Das -- were present in the meeting that approved demonetisation.

The government had argued that the circulation of Rs. 500 notes was up by 76 per cent and Rs.1,000 up by 109 per cent. The RBI, however, said that argument did not adequately support cash ban recommendation.

The central bank directors also felt that while counterfeit notes were a concern, "Rs. 400 crore as a percentage of the total quantum of currency in circulation in the country is not very significant". Also, most of the black money was held not in the form of cash but in the form of assets like gold or real estate and demonetization would not have a material impact on those assets, the board felt.

The board pointed out that the growth rate of economy mentioned was the real rate while the growth in currency in circulation was nominal. "Adjusted for inflation, the difference may not be so stark. Hence, the argument does not adequately support the recommendation," the directors said.

The Board was assured that the matter had been under discussion between the centre and the RBI for over six months. There was also an assurance that the government would take mitigating measures to contain the use of cash.

 

More than 99 per cent of the banned cash returned to the system, which raised questions over the government's drastic move to check black money.

https://www.ndtv.com/india-news/rbi-had-objections-to-notes-ban-agreed-in-public-interest-reveals-rti-2005906?pfrom=home-topscroll

[timmy]

RBI board had said note ban a commendable step but will have short-term negative effect on GDP for current year

PTI

NEW DELHI, MARCH 11, 2019 16:30 IST

UPDATED: MARCH 11, 2019 17:10 IST

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Demonetisation

Two-and-a-half hours before PM announced demonetisation on Nov. 8, 2016, it also observed at a meeting that the unprecedented move will not have any material impact on tackling black money menace.

The Reserve Bank of India board, which included the present Governor Shaktikanta Das as a director, had warned of short-term negative impact of demonetisation on the country’s economic growth and observed that the unprecedented move will not have any material impact on tackling the black money menace.

The board, according to minutes of the meeting revealed by the central bank in an RTI reply, met just two-and-a-half hours before Prime Minister Narendra Modi, in an address to the nation, announced the demonetisation decision on November 8, 2016.

Curbing black money was one of the prime objectives of the shock move to junk old ₹500 and ₹1,000 notes, which saw 86% of high value currency going out of circulation.

The minutes of the board meeting, which approved the government’s request for demonetisation, recorded the presence of then RBI Governor Urjit Patel and then Economic Affairs Secretary Shaktikanta Das. Others present included then Financial Services Secretary Anjuli Chib Duggal and RBI Deputy Governors R. Gandhi and S.S. Mundra. Both Mr.Gandhi and Mr. Mundra are not part of the board now, while Mr. Das was appointed as the RBI Governor in December 2018.

“It is a commendable measure but will have short-term negative effect on GDP for the current year,” as per the minutes posted by RTI activist Venkatesh Nayak on the website of Commonwealth Human Rights Initiative.

“Most of the black money is held not in the form of cash but in the form of real sector assets such as gold or real estate and that this move would not have a material impact on those assets,” the board observed in its 561st meeting held in Delhi.

The Prime Minister had announced demonetisation of high-value currency notes with the aim to curb the black money, check counterfeit currency and stop terror finance among others.

While any incidence of counterfeiting is a concern, the minutes said, ₹400 crore as a percentage of the total quantum of currency in circulation in the country is not very significant.

Of the ₹15.41 lakh crore worth ₹500 and ₹1,000 notes in circulation on November 8, 2016, notes worth ₹15.31 lakh crore came back during the 50-day window for depositing junk notes given to resident Indians, and till June 2017 for non-resident Indians.

Only ₹10,720 crore of the junked currency notes did not return to the banking system, rest 99.9% was deposited raising question mark over the government’s effort of curbing black money through the demonetisation.

The minutes pointed that “the growth rate of economy mentioned is the real rate while the growth in currency in circulation is nominal. Adjusted for inflation, the difference may not be so stark. Hence, this argument does not adequately support the recommendation (in favour of demonetisation).”

The government has always maintained that the decision did not have much impact on the GDP growth.

The board was assured that the government would take mitigating measures to contain the use of cash, it said.

In another reply, the RBI has said it has no data on the old 500 and 1,000 rupee notes used to pay for utility bills such as fuel at petrol pumps — payments that are anonymous and are believed to have formed a good part of the demonetised currency that returned to the banking system.

The government had allowed the exchange of the junked notes as well as they being used for payment of utility bills for 23 services.

Both old 500 and 1,000 rupee notes could be used at government hospitals, railway ticketing, public transport, airline ticketing at airports, milk booths, crematoria/burial grounds, petrol pumps, metro rail tickets, purchase of medicines on doctor prescription from the government and private pharmacies, LPG gas cylinders, railway catering, electricity and water bills, ASI monument entry tickets and highway toll.

On November 25, 2016, the exchange of old notes was stopped and the government allowed the use of only old 500 rupee notes at these utilities till December 15, 2016. The government, however, stopped the use of even this currency at petrol pumps and for the purchase of air tickets at airports abruptly with effect from December 2, 2016, after reports that they were becoming fronts for laundering of old currency notes.

https://www.thehindu.com/news/national/rbi-board-warned-of-notebans-short-term-impact-on-economy-no-material-effect-on-black-money/article26496728.ece?homepage=true

[Kool_SRG]

Chusa... Also Petrol bunks & Hospitals 500, 1000 use chesina notes during demonitization meeda no count ata..

[LazyRohit]

 Biggest scam of Alltime in IND is Demonetization

[Edhokati]

2 hours ago, Kool_SRG said:

Chusa... Also Petrol bunks & Hospitals 500, 1000 use chesina notes during demonitization meeda no count ata..

matter enti bro?

[jobseeker1]

But CBN proposed