Cash crunch situation will normalise soon: Urjit Patel tells Public Accounts Committee

Reserve Bank of India (RBI) Governor Urjit Patel on Friday told the Public Accounts Committee (PAC) that the cash crunch in the country post the November 8 demonetization drive will normalise with the passage of time.

Sources said the central banking institution also informed the PAC that specific agencies like Financial Intelligence Unit and Income Tax Dept are looking into abnormal deposits. Explaining demonetization to the PAC members, the RBI Governor informed them about the efforts being made to normalise the situation of cash crunch in rural areas. He also threw light on the efforts being made to normalise the situation in urban areas.

The RBI Governor had earlier on Wednesday appeared before Parliament's Standing Committee on Finance over the same issue during which he failed to disclose the amount of money that returned to the banking system post demonetization. In a surprise move on November 8, Prime Minister Narendra Modi had announced the demonetization of old Rs. 500 and Rs. 1,000 notes. Following the decision, the RBI had put restrictions on withdrawal of cash from the 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.