Be­fore PM’s ad­dress

RBI board of direc­tors made rec­om­men­da­tion af­ter meet­ing on Nov 8; govt had lit­tle time

Hindustan Times ST (Mumbai) - Live - - FRONT PAGE - Aloke Tikku

NEW DELHI: The Re­serve Bank of In­dia (RBI) rec­om­mended de­mon­eti­sa­tion of 500- and 1,000ru­pee ban­knotes hours be­fore Prime Min­is­ter Naren­dra Modi an­nounced the sur­prise move in a tele­vised ad­dress in the evening of Novem­ber 8.

The gov­ern­ment and the RBI have kept the con­sul­ta­tion process that led to the de­ci­sion to de­mon­e­tise 86% of In­dia’s cash in cir­cu­la­tion a closely-guarded se­cret.Both,how­ever,havein­sisted that the de­mon­eti­sa­tion plan had been un­der dis­cus­sion for long and­con­sul­ta­tion­swere­be­ingheld.

Eco­nomic af­fairs sec­re­tary Shak­tikanta Das told re­porters soon af­ter the Prime Min­is­ter’s ad­dress that there was “no need to go into the process which led to this de­ci­sion. I think what we should be fo­cus­ing is the out­come and the de­ci­sion it­self”.

The gov­ern­ment’s shock move has led to a se­vere cash crunch, forc­ing mil­lions of peo­ple to line up­at­banksandATMkiosks.Cash with­drawals have been re­stricted, but most banks are un­able to pro­vide even that. The Op­po­si­tion’s protests over the notes ban have washed out Par­lia­ment’s win­ter ses­sion.

The Re­serve Bank of In­dia Act, 1934, empowers the Union gov­ern­ment to de­mon­e­tise any se­ries of ban­knotes. The­gov­ern­ment,how­ever, can­not take a de­ci­sion on its own, but only on the rec­om­men­da­tion of the RBI’s cen­tral board.

In re­sponse to a right to in­for­ma­tion re­quest, which Hin­dus­tan Times had placed, the RBI said the bank’s cen­tral board of direc­tors made the rec­om­men­da­tion at its meet­ing in New Delhi on Novem­ber 8. Only eight of the 10 board mem­bers at­tended the cru­cial meet.

Apart from RBI chief Ur­jit Pa­tel and eco­nomic af­fairs sec­re­tary Das, the meet­ing had RBI deputy gover­nors R Gandhi and SS Mun­dra, Nachiket M Mor, the coun­try di­rec­tor for the Bill and Melin­daGatesFoun­da­tion,Bharat Naro­tam Doshi, for­mer chair­man of Mahin­dra and Mahin­dra Fi­nan­cial Ser­vices Lim­ited, for­mer Gu­jarat chief sec­re­tary Sud­hir Mankad, and fi­nan­cial ser­vices sec­re­tary An­july Chib Dug­gal.

PTI PHOTO

In­come Tax of­fi­cials raid Kotak Mahin­dra Bank branch in New Delhi on Fri­day.

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