Talks on Note Ban Started in Feb Last Year, Nod Came from RBI: FM RBI board met, in­de­pen­dently de­cided on de­mon­eti­sa­tion and made rec­om­men­da­tion to govt, Jait­ley tells Ra­jya Sabha

The Economic Times - - Economy: Macro, Micro & More - Our Bureau

New Delhi: Gov­ern­ment and top Re­serve Bank of In­dia of­fi­cials held de­tailed talks on de­mon­eti­sa­tion start­ing in Fe­bru­ary last year be­fore the cen­tral bank’s board took a for­mal de­ci­sion on the mat­ter and con­veyed it to the gov­ern­ment, which took the fi­nal call, the Ra­jya Sabha was in­formed on Tues­day.

Fi­nance min­is­ter Arun Jait­ley said eight of the 10 di­rec­tors of the RBI board were present at the Novem­ber 8 meet­ing that made an in­de­pen­dent fi­nal rec­om­men­da­tion with re­gard to de­mon­eti­sa­tion to the gov­ern­ment. Prime Min­is­ter Naren­dra Modi an­nounced later that day that ₹ 500 and ₹ 1,000 notes would cease to be le­gal ten­der at mid­night. He said that in May 2016, the RBI board de­cided to print cur­rency of higher de­nom­i­na­tion as a re­place­ment for notes that would be de­mon­e­tised.

“Con­sul­ta­tions at a very se­nior level with the RBI on this is­sue had started way back in the month of Fe­bru­ary 2016 it­self,” he said. "There­after a se­ries of meet­ings used to be held pe­ri­od­i­cally, at times on a de­fined day, once a week, where the se­niors in the RBI as also in the go-

vern­ment were in con­sul­ta­tion. Be­cause the de­ci­sion had to be kept in ut­most se­crecy, it is for this par­tic­u­lar rea­son that these were not put into pub­lic do­main.”

To a ques­tion on whether the cen­tral bank took the de­ci­sion on its own or at the di­rec­tion of the gov­ern­ment, he said, “The RBI board met and in­de­pen­dently ap­plied its mind and made a rec­om­men­da­tion to the gov­ern­ment.”

Jait­ley said the long-drawn con-

sul­ta­tion with RBI cov­ered the de­mon­eti­sa­tion process in­clud­ing cur­rency ceas­ing to be le­gal ten­der.

“A for­mal pro­posal to the RBI to con­sider this mat­ter in the board is sent by the fi­nance min­istry to the RBI board and RBI in­de­pen­dently con­sid­ers it, ap­plies its mind and ac­cord­ingly makes its rec­om­men­da­tion to the gov­ern­ment,” he said.

Va­can­cies on the RBI board are in the process of be­ing filled, he said.

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