The government had approved the new-design high-denomination notes of Rs 500 and Rs 2,000 on June 7, 2016, six months before Prime Minister Narendra Modi announced the demonetisation of the old Rs 500 and Rs 1,000 notes on November 8, RBI governor Urjit Patel has told a parliamentary panel.
Patel had appeared before the parliamentary standing committee on finance, which is looking into the controversial demonetisation issue, on January 18 and made an oral presentation. However, as several members were not satisfied with his explanation, the panel had asked Patel to submit written responses to the concerns expressed by them. A copy of the replies submitted by the RBI governor to the panel recently have been accessed by Business Standard.
Sources said Patel has been again asked to appear before the panel on May 25 as there are still a few gaps left in the written responses given by him.
The issue cropped up on April 20 when the standing committee on finance met to review issues related the ministry of corporate affairs. While opposition members like former prime minister Manmohan Singh and BJD lawmaker Bhartruhari Mahtab wanted to summon Patel on May 25, BJP members Nishikant Dubey, Kirit Somaiya and S C Udasi opposed the move saying demonetisation was a non-issue after the saffron party did well in the five assembly states including Uttar Pradesh.
Replying to a query made by BJP member Kirit Somaiya, who wanted to know if demonetization would help curb black money, the RBI governor said that the government was best placed to reply on the issue.
In response to another query of Somaiya on no-reported fake currency, Patel said estimating counterfeit notes in the hands of public was difficult however a study made by the Indian Statistical Institute said that fake currency in circulation was around Rs 400 crore and Rs 70 cr was being pumped into the system annually. Patel also said that the RBI found that counterfeit notes in the denomination of Rs 500 and Rs 1,000 were in circulation and it was getting increasingly difficult to identify genuine notes from fake ones.
Replying to a query raised by panel chairman M Veerappa Moily, a Congress member, the RBI governor said that the process of remonetisation was on and estimation of multiple activities and multiple costs was a complex exercise.
Another Congress member Jyotiraditya Scindia wanted to know the views of former RBI governor Raghuram Rajan on demonetization as consultation for the same had started in January 2016. Patel said that no such minutes of conversation with his predecessor were available.
Much to the annoyance of the opposition members, the RBI governor replied that the central bank was still counting the amount of money that had come back into the system post demonetisation.