Reserve Bank of India (RBI) Governor Urjit Patel on Wednesday appeared before a parliamentary committee to answer questions on demonetisation issue. Patel faced some tough questions from MPs but escaped possible grilling after the intervention of former Prime Minister Manmohan Singh, a member of the panel.
Patel, who along with other RBI and finance ministry officials appeared before the Parliamentary Standing Committee on Finance, could not reply to questions like when normalcy would be back in the banking system and how much of demonetised currency was deposited during the 50-day window.
Before further grilling could start, Singh, who made a forceful speech against demonetisation in Rajya Sabha calling it a "monumental failure and organised loot", intervened to say that the central bank and the Governor's position as an institution should be respected.
He should not be put to odd questions, Singh, who himself was RBI Governor once, is believed to have told the Committee.
Singh is understood to have told Patel that he need not answer a question put by one of the members relating to non-removal of cash withdrawal restrictions.
Congress MPs like Digvijay Singh wanted Patel to be specific in his replies on lifting of cash withdrawal restrictions and wanted to follow through with tougher questions but were prevented by Singh and others, they said.
Patel, flanked by Deputy Governors R Gandhi and SS Mundra, explained to the members that discussions for demonetising high value currency notes between the government and the RBI had been going on since early 2016, and the central bank was in agreement with the government on the objective behind scrapping of the Rs 500/1000 notes.
The Committee headed by former Union Minister and senior Congress leader M Veerapa Moily had called the RBI and finance ministry officials to discuss the "demonetisation of Indian currency notes of Rs 500 and Rs 1,000 and the impact thereof".
Patel also could not give a definite number of old Rs 500 and Rs 1000 bills returned post demonetisation as RBI was still tabulating those.
"He (Patel) replied in part but he could not answer main questions. How much money has come back into the system and by when banks' operations will be normal. It seems RBI officials were in very defensive position on demonetisation," a senior
opposition member said after the meeting.
The panel was informed that new currency worth Rs 9.2 lakh crore has been infused into the system post note ban.
"Members asked several questions from the Finance Ministry officials as well as from the RBI Governor. As there was no time, the ministry officials would be replying to the questions on a later date.
"The RBI Governor replied to some questions. But the process could not be completed. They would be called again," sources said.
Patel is also scheduled to appear before the Public Accounts Committee of Parliament on the same issue on January 20.
In a surprise move on November 8, Prime Minister had announced the demonetisation of old Rs 500 and Rs 1,000 notes.
Following the decision, the RBI had put restrictions on withdrawal of cash from ATMs as well as from banks to deal with shortage of new high denomination currency notes. This led to long queues at ATMs and bank branches.
The cash situation has improved gradually with supply of new Rs 500 and Rs 2,000 notes. Yesterday, the RBI increased the daily withdrawal limit from ATMs to Rs 10,000, though it kept the weekly ceiling at Rs 24,000.
(With PTI inputs)
