RBI governor Urjit Patel’s briefing leaves MPs no wiser about demonetisation

New Delhi: Reserve Bank of India (RBI) governor Urjit Patel on Wednesday deposed before the parliamentary standing committee on finance, but failed to answer most of the questions raised by members of the committee, according to a person who attended the meeting.

The only new piece of information Patel provided is that Rs9.2 trillion worth of currency was injected into the economy after the 8 November ban on high-value currency notes.

However, Patel did not answer how much of the Rs15.44 trillion worth of demonetized money has returned to the central bank, holding that counting of old currency notes is still going on.

Last month, after RBI said that Rs12.44 trillion of old currency had been returned by 10 December, the finance ministry disputed the figure, citing possible double-counting and calling for the data to be sanitized.

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RBI has not released any fresh data after the finance ministry’s objection.

“When asked by when this number will come out in the public domain or whether RBI could share it with the standing committee, there was no definite answer,” said the person cited above, a member of the standing committee present at the meeting.

The person requested anonymity.

“On the question of how long the restrictions on withdrawal of money from people’s own accounts will remain, there was no clear-cut answer. The only answer given was that providing money is not a problem,” the person said.

When an MP asked the RBI governor whether the banking system would collapse if restrictions on the withdrawal of money are removed, former prime minister Manmohan Singh, who is also a member of the standing committee, intervened—the only time he did during the meeting—and advised Patel that he need not answer the question.

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Replying to the questions by MPs, finance ministry officials present at the meeting said the discussions on currency with RBI had been on since January 2016.

However, they did not respond when asked whether the discussions pertained to demonetisation or merely new currency notes, added the committee member cited in the first instance.

“RBI is expected to submit a written reply and another meeting of the standing committee will be held after the first part of the budget session ends on 9 February,” this person said.

The RBI governor will depose before the public accounts committee (PAC), which audits revenue and expenditure of the government, on Friday and brief its members on the monetary policy of the central bank.

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“Though PAC has a broader mandate, questions about demonetisation and autonomy of the RBI are sure to be raised during the meeting,” the committee member said.

Apart from Patel, the meeting was attended by economic affairs secretary Shaktikanta Das, banking secretary Anjuly Chib Duggal and revenue secretary Hasmukh Adhia. Bankers including Chanda Kochhar of ICICI Bank Ltd and Usha Ananthasubramanian of Punjab National Bank also appeared before the committee, which is headed by senior Congress leader Veerappa Moily.