RBI to face House panel for the third time on note ban
NEWDELHI: When Reserve Bank of India (RBI) governor Urjit Patel appears before Parliament’s standing committee on finance on November 12, it would be the third time that the central bank would be facing a House panel on the contentious issue of demonetisation.
The meeting with Patel would also indicate that the standing committee has restarted discussions on the issue, months after it failed to produce a report amid speculation that its members had conflicting views .
Prime Minister Narendra Modi’s bold decision to scrap high-value bank notes on November 8, 2016, and the subsequent push for cashless or digital transactions left the Indian polity divided even as the swift moves against corruption caused a drastic impact on the economy.
The parliamentary panel, headed by senior Congress leader Veerappa Moily, picked the issue for debate and on January 18, 2017, the RBI first deposed before it. After six months, on July 12, the RBI brass again appeared before it.
“After our meetings with the RBI chief and other senior officials of the RBI, it had given us a report. Now, we have called RBI governor Urjit Patel to come and brief us on demonetisation and a legislative bill. Some members might also want to ask him questions,” Moily told Hindustan Times, explaining the rationale behind setting up another meeting with RBI.
At least two senior members added that the Reserve Bank of India brass meeting the standing committee for the third time was a rare occurrence, indicating the complex and contentious nature of the issue.
The notice for the meeting says, “Oral Evidence of the representatives of Reserve Bank of India on (i) ‘Demonetisation of Indian currency notes of ₹500 and ₹1000 and ramifications thereof’ and (ii) ‘The Banning of Unregulated Deposit Schemes Bill, 2018’ and issues related thereto.”
A few months ago, a draft report on demonetisation could not be adopted as panel members belonging to the ruling side insisted that the report cannot contain any negative comments.
Moily had confirmed that no report was put out but added that some members wanted more discussion on the subject.
Bhartruhari Mahtab, a senior member of the panel, said, “Two years after demonetisation, we are probably now in a much better place to study its impact and related issues.”
Many members are hopeful that a report may finally see the light of day. The last time the RBI governor faced the panel, he explained why ATMs had run out of cash in June and why enough steps were not taken to tackle banking frauds. Patel also listed the steps being taken to address the non-performing assets (NPA) issue.
So far, different wings of the finance ministry, industry bodies, home ministry officials and other entities have deposed before the panel on demonetisation and the transformation towards a digital economy.
THE RBI BRASS MEETING THE COMMITTEE FOR THE THIRD TIME WAS A RARE OCCURRENCE, INDICATING COMPLEX AND CONTENTIOUS NATURE OF THE ISSUE