Demonetisation: RBI says can't say who all took the decision; have no details on illegal accounts

Mumbai: The Reserve Bank of India (RBI) has said that it cannot disclose who all, exactly, were part of the decision making process in the run up to the demonetisation announcement on 8 November, 2016. This information is ‘sensitive’ and is exempt from the RTI Act, the central bank said responding to an RTI query filed by Firstpost.

“The information sought relates to sensitive matters pertaining to discontinuation of discontinuation/ withdrawal of bank notes. The information is exempt from disclosure under section 8(1) (a) of RTI Act, 2005,” the RBI said.

Further, the RBI said “the matter regarding the withdrawal of the legal tender character of banknotes is governed by the provisions of Section 26 of the Reserve Bank of India Act, 1934.”

Prime Minister Narendra Modi announced the decision to demonetise Rs 500 and Rs 1,000 notes on 8 November. This constituted about 86 percent of the total currency in circulation at that point or about Rs 15.44 lakh crore.

In January, the RBI Governor Urjit Patel had said before a Parliamentary panel that the central bank had issued new currency notes worth Rs 9.2 lakh crore but didn’t clarify on the volume of cash deposits banking system received post demonetisation saying the counting process is still on.



Demonetisation, launched with the originally stated objective of clamping down on black money, fake currency and corruption, triggered a chaos in the country with cash crunch in the following two months, some of which has eased by now, but the impact on multiple sectors still present.

Various government and private agencies, both Indian and foreign, had predicted a sharp decline in the GDP in the aftermath of note ban. But, on a positive note, the note ban gave a push to non-cash transactions in the weeks post the announcement with more people, facing cash crunch, moving to card and electronic payments.

In an earlier RTI-based report, the RBI had said that it recommended demonetisation of Rs 500 and 1,000 notes hours before Prime Minister Narendra Modi announced it. “The recommendation was made in the meeting of the Central Board of Directors of the Reserve Bank of India held in New Delhi on 8 November, 2016," the RBI said.

No info on illegal bank accounts

Also, the apex bank doesn’t have information on the number of illegal bank accounts found since the note ban. Black money hoarders might have opened such accounts to push their ill-gotten wealth to the banking system.

The RBI said “information sought is not available with us”.

RBI Reply for RTI Query - Feb 3, 2017 by Anonymous LRhbdzfjq on Scribd

There have been reports of wrongdoers opening fake bank accounts using benamis to make their black money legit. In the aftermath of demonetisation there have been media reports of a mad rush to open accounts with chances of foul play by black money hoarders to inject their money in to the banking system.

A senior banker, who requested anonymity, said RBI has become ‘opaque’ in divulging information.

“I don’t know what is so sensitive about revealing the details of the discussion process that resulted in demonetisation on 8 November. Also, that the RBI doesn’t have information on illegal back accounts (benami, accounts opened with KYC lapses) suggests that it never asked for any inspection reports from banks considering a special situation,” the banker said.

Demonetisation gains unclear

The actual, tangible gains of demonetisation exercise are as yet unclear. Going by the budget statement by finance minister Arun Jaitley last week, the government is unlikely to receive any major ‘windfall’ gains from the note ban, except the expectation of ‘higher tax realisation from the huge cash deposits in banks’.

But, as this report in The Wire points out, the budget estimates of gross tax revenues for 2017-18, same as the revised estimates for 2016-17 – 11.3 per cent of GDP, shows that the government isn’t expecting any big bonanza. “The budget was completely silent on this count. There was no mention about the gains out of this exercise,” said the banker quoted earlier.

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Updated Date: Feb 06, 2017 11:32:20 IST

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