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
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.