Will RBI chief Urjit Patel lose his currency?

A meme that was circulating on social media mocked the new RBI governor Urjit Patel as missing in action as less intelligent bank employees around the country were struggling with daily changes in exchange limits and fund transactions. Barring at a press conference on November 9, which Patel attended alongside economic affairs secretary Shaktikanta Das, he has stayed away from public appearances, giving a general impression that the guv and the central bank had very little role to play in the whole demonetization episode.

While banks struggle with lack of availability of small currency banknotes and customers sweat it out in sweltering sun and long queues outside branches and ATMs, Patel has stayed away. Except issuing a few press releases, the RBI hasn’t held any press conference to ward off numerous rumours by panic-stricken customers and bring back normalcy in banking operations.

While murmurs blaming the governor are getting louder, a leader of India’s largest confederation of bank officers has called for his resignation. D Thomas Franco, senior vice president, All India Bank Officers Confederation, which represents over 2.5 lakh bankers, believes that it is the RBI governor who should take moral responsibility for the crisis and the deaths of a dozen bankers.

While most people praise the revolutionary demonetization move by the government as a first decisive step to clean up black money, the RBI governor is facing the flak for the ill-preparedness prior to making the high-value currencies invalid. In the demonetized milieu, the governor seems to have lost the steam, despite the fact that most believe that it was more of a political decision, and that the idea never originated from the central bank. 

Rural and semi-urban markets, where district cooperative banks were banned from exchanging old currency notes, have come to a grinding halt, with legal cash transactions being the first casualty. Many believe that the governor has failed in his role by taking a crucial economic decision without planning, which has brought havoc to the nation’s economy and lives of the majority. 

The jury is still out on whether the sudden decision would bring in any huge windfall to the government. However, many argued that the government could have taken lessons from other countries and from its own demonetisation drive in 1978. They also blame RBI for bringing back all the soiled notes they were meant to be destroyed. Had there been a little planning, the central bank could have printed Rs 500 and Rs 100 notes instead of printing Rs 2,000 notes.

Will Patel be able to survive the storm? Or will he be a fall guy? Let’s keep a watch.