Reserve Bank of India Governor Urjit Patel reportedly forwarded an explanation to the Public Accounts Committee members, assuring them that the cash situation will normalise soon. Sources said that Patel informed PAC members that the RBI was in talks with service providers and banks to reduce transaction costs, and that the notorious demonetisation move would have a short term impact on GDP, but will have a positive impact in mid and long term.
"Members of the Parliamentary Standing Committee on Finance had criticised the RBI Governor for his inability to answer queries related to demonetisation. 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 how much old currency has come into the banks," Roy added. Sources also quoted Patel as telling the Parliamentary Standing Committee on Finance that £92 billion in new currency had been introduced into the system. Patel briefed the panel about the notification and its impact on the economy and the steps taken by the central bank to deal with the cash crunch.
When facing too much heat from the opposition, former prime minister and RBI governor Manmohan Singh came to Patel's rescue, advising him not to reply to questions that could potentially create problems for the central bank. Also present at the meeting other than representatives of the finance ministry, were those from the Department of Economic Affairs, Financial Services and Revenue, former Union Minister and Senior Congress leader M Veerappa Moilyu, representatives of Indian Banks Association, State Bank of India, Punjab National Bank, and Oriental Bank of Commerce.
The Bank had earlier given a seven-page reply to the questions raised by the committee, and said it had received advisory instructions from the government to consider the demonetisation of Rs 500 and Rs 1000 notes. As per the RBI, the government wanted it to consider demonetisation of high value currencies "to mitigate the triple problems of counterfeiting, terrorist financing, and black money" on November 7.
