The RBI Governor appeared before the Public Accounts Committee again on Friday.
RBI Governor Urjit Patel has reportedly given an explanation to the Public Accounts Committee (PAC) members and assured them that the cash situation will normalise soon, reported ANI quoting sources.
Patel also reportedly told the PAC that efforts were on to normalise situation in rural areas and that the situation in urban areas was almost normal. RBI also informed PAC that specific agencies like Financial Intelligence Unit and Income Tax Dept were looking into abnormal deposits.
According to ANI's sources, Patel informed PAC members that the RBI was in talks with service providers and banks to reduce transaction costs. The RBI Governor also informed PAC that demonetization would have a short term impact on GDP but will have a positive impact in mid and long term.
On Wednesday, members of the Parliamentary Standing Committee on Finance had criticised the RBI Governor for his inability to answer queries related to demonetization. Patel was unable to tell us how much money has come back to the banks," said Saugata Roy, TMC MP.
"The governor was unable to tell us that how much old currency has come into the banks," added Saugata Roy.
PTI sources also quoted the RBI governor as telling the Parliamentary Standing Committee on Finance that Rs.9.2 lakh crore in new currency had been introduced into the system. Patel briefed the parliamentary panel about demonetization and its impact on the economy and the steps taken by the central bank to deal with the cash crunch.
Manmohan Singh, who was a former RBI governor, had also come to the rescue of Patel and advised him not to reply to questions which could create problems for the central bank, whose autonomy, according to critics, has been depleted by its role in the demonetization drive.
Besides, representatives of the finance ministry, including from the Department of Economic Affairs, Financial Services and Revenue, briefed the Standing Committee on Finance headed by former Union Minister and senior Congress leader M Veerappa Moily. Representatives of Indian Banks Association (IBA), State Bank of India (SBI), Punjab National Bank (PNB) and Oriental Bank of Commerce (OBC) were also present in the meeting.
RBI had earlier given a seven-page reply to the questions raised by the committee. It had then said that it had received advisory instructions from the government to consider the demonetization of Rs.500 and Rs.1,000 notes.
According to the RBI, the government wanted it to consider demonetization of high value currencies "to mitigate the triple problems of counterfeiting, terrorist financing and black money" on November 7. The central board took a decision on this and the government announced the demonetization on November 8.
The RBI had cleared the introduction of new Rs. 2,000 notes in May 2016 and that the central board had not discussed the ban of Rs. 500 and Rs. 1,000 notes in its meetings in May, July or August.
With inputs from PTI/ANI.
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