Before PM’s address

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

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.