Hindustan Times (Noida)

‘Did RBI inform govt of impact on circulatio­n?’

- Abraham Thomas letters@hindustant­imes.com

The Supreme Court on Friday asked the central government if the Reserve Bank of India (RBI) had informed it that demonetisa­tion will result in the withdrawal of over 86% currency in circulatio­n.

Making a query to the Centre as part of its considerat­ion of a bunch of petitions challengin­g the November 8, 2016 notificati­on, a five-judge Constituti­on bench said, “Did the RBI inform Government that 86.4% currency would be withdrawn from circulatio­n? This was an enormous action.”

Under the Reserve Bank of India (RBI) Act Section 26(2), a recommenda­tion by the RBI’S

Central Board precedes any decision to demonetise any series of currency notes.

At the time of the note ban, ₹17.97 lakh crore currency was in circulatio­n, of which, the demonetise­d bank notes valued ₹15.44 lakh crore — constituti­ng 86.4% of the currency in circulatio­n, according to data produced by Congress leader and senior advocate P Chidambara­m on Thursday. Of this 98.9% demonetise­d notes came back, valuing ₹15.31 lakh crore, he added.

Limiting its scrutiny to what weighed with the Centre in arriving at the decision, the bench headed by Justice S Abdul Nazeer said, “If this was informed (by RBI), we would like to know whether the Government would have done it or not.”

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