New Delhi: The Reserve Bank of India (RBI) had “kept ready” a reasonable stock of new Rs500 and Rs2,000 notes before the announcement of demonetisation on 8 November by Prime Minister Narendra Modi.
However, no records of discussion between the RBI and the government on demonetisation were maintained because of secrecy, RBI governor Urjit Patel has told a Parliamentary Standing Committee on Finance.
While keeping the “secrecy in mind”, the RBI did all it could to make the transition process to replace the invalid currency least disruptive and to see that the inconvenience to the public is addressed as far as possible, he said.
“Critical factors, such as installed capacity for printing and other resources viz availability/expected supply of inputs, like bank note paper, ink, logistics requirements, etc. were factored in and was shared and discussed with the government periodically,” Patel said in a written reply.
“The arrangement for printing of new notes of Rs2,000 and Rs500 was started months back taking into the account all critical factors. By the date of the announcement, reasonable amount of new designed notes had already been printed and kept ready,” he said.
The government had withdrawn old Rs500 and Rs1,000 notes on 9 November last year with an aim to check black money, terror financing and counterfeit currency. The move had taken about 86% of the currency out of circulation, leading to huge shortage of cash.
RBI informed the parliamentarians that as on 8 November, there were 17,165 million pieces of Rs500 and 6,858 pieces of Rs1,000 notes in circulation aggregating Rs15.44 lakh crore.
Patel also said discussions between the government and the central bank had started in early 2016 when Raghuram Rajan was the RBI governor. On the details of conversation between Rajan and the government on demonetisation, Patel said: “No such minutes of conversation with the previous RBI governor are on record.”