Manmohan Singh comes to rescue of RBI Governor Urjit Patel as MPs’ panel grills him on demonetization

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NEW DELHI: RBI Governor Urjit Patel on January 18 faced some tough questions from MPs as he could not set a time frame for return of normalcy in the banking system.

However, the RBI Governor informed the MPs that the central bank had replaced Rs 9.2 lakh crore or 60 per cent of demonetized currency.

Also, Patel could not give a definite number of old Rs 500 and Rs 1000 bills returned post demonetization as RBI was still tabulating those.

Sources said the Governor was spared a tough grilling at the meeting of the Parliament’s Standing Committee on Finance as senior MPs including former Prime Minister Manmohan Singh intervened to say RBI as an institution needs to be respected.

Congress MPs like Digvijaya Singh wanted Patel to be specific in his replies on lifting of cash withdrawal restrictions and wanted to follow through with tougher questions but were prevented by Manmohan Singh and others, they said.

Patel, flanked by deputy governors R. Gandhi and S.S. Mundra, explained to the members that discussions for demonetizing high value currency notes between the government and the RBI had been going on since early 2016, and the central bank was in agreement with the government on the objective behind scrapping of the Rs 500/1000 notes.

The Committee headed by former Union minister and senior Congress leader M. Veerapa Moily had called the RBI and finance ministry officials to discuss the “demonetization of Indian currency notes of Rs. 500 and Rs. 1,000 and the impact thereof”.

As members could not complete their questions, the committee decided to call RBI Governor and ministry officials again on a later date, most likely after Parliament goes on a break during the Budget session.

“He (Patel) replied in part but he could not answer main questions. How much money has come back into the system and by when banks’ operations will be normal. It seems RBI officials were in very defensive position on demonetization,” a senior opposition member said after the meeting.

The panel was informed that new currency worth Rs. 9.2 lakh crore has been infused into the system post note ban.

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