Reserve Bank fails to provide reason for norms withdrawal

The RBI withdrew its Monday’s circular for banks to question those depositing more than `5,000 in junked currency.

The government had then said it wanted to reduce queues at banks, already facing crowding after the recall of highvalue bills led to a cash crunch.

The central bank did not provide any reason for the withdrawal. “The government told us to withdraw the circular,” news agency Reuters quoted an RBI official as saying.

This is one of the many circulars withdrawn by the RBI after Prime Minister Narendra

Mr Modi announced to a stunned nation on November 8 that he would scrap 86 per cent of the cash in circulation to fight black money and fake currency. “The RBI is now the Reverse Bank of India, changing demonetisation norms 126 times in 43 days,” said Congress spokesperson Randeep Surjewala. “The RBI is behaving like a headless chicken. Now we can see the damage Raghuram Rajan’s removal (as RBI governor) has done,” tweeted senior Supreme Court advocate Prashant Bhushan.

After Monday’s circular, many banks started refusing to accept demonetised currency above `5,000 fearing that they could later face questioning from the income-tax department (I-T) or the enforcement directorate (ED).

This resulted in inconvenience to the general public, and several of them questioned why after asking people not to rush to deposit cash the government was now seeking an explanation.

The All India Bank Officers' Confederation (AIBOC) had demanded complete withdrawal of the order as bank staff faced public wrath.

Union finance minister Arun Jaitley had on Monday and Tuesday assured people that there would be no questions asked to customers who would make one-time deposits above `5,000.