The Reserve Bank of India (RBI) has said that its Central Board approved the proposal to issue new notes of the denomination of Rs 2,000 as early as May 2016, a fact it mentions in its note to the Standing Committee on Finance, but adds that there was no discussion on a possible withdrawal of Rs 500 and Rs 1,000 notes at its board meetings in May or July or August.
In its Right to Information (RTI) reply to an application filed by The Indian Express, the RBI said the Central Board discussed and approved the proposal to introduce Rs 2,000 notes on May 19 last year.
To a specific question on whether there was a discussion on a possible withdrawal of legal tender of the Rs 500 and Rs 1,000 notes at any of the board meetings of the RBI last year, the RBI said that this was not discussed during the May 2016 Board meeting or the subsequent Board meetings on July 7 and August 11.
Raghuram Rajan was Governor when the proposal to introduce new Rs 2,000 notes was approved by the RBI board in May last year.
On a specific query about whether the RBI Central Board received any proposal to demonetise Rs 500 and Rs 1,000 notes from the government, the RBI said in another RTI reply, “the Central Board of Reserve Bank of India in its meeting held on November 8, 2016, recommended the proposal to withdraw legal tender character of 500 and 1000 rupee notes to the Central Government.’’
However, the RBI declined to provide the minutes of the Central Board meeting on November 8, 2016, saying that the “information sought is exempt from disclosures under 8(1)(a) of the RTI Act, 2005.”
The RBI, in the RTI reply, also declined to provide any comment on whether the then Governor Raghuram Rajan had sent any letter or communication to the government against withdrawing Rs 500 notes in 2016 before his term ended in September 2016. Rajan who is back to his teaching assignment at Chicago University’s Booth School of Business did not respond to emails seeking his comments on this issue.
In a speech at a public rally a week after he announced his government’s decision to pull out high value notes in mid November, Prime Minister, Narendra Modi had said that the move was ten months in the making. and secrecy had to be maintained to prevent the dishonest from converting their black money. In his address to the nation on November 8, when he first announced the decision, Modi had said that in 2014, the RBI had sent a recommendation to the government for issue of 5000 and 10,000 rupee notes. After careful consideration this was not accepted (by the government) he said.
Rajan completed his three year term as RBI Governor on September 4, 2016 and Urjit Patel assumed charge as Governor the next day.
According to the RTI reply to The Indian Express, Governor Urjit Patel, Deputy Governors R Gandhi, SS Mundra, Shaktikanta Das, Secretary, Dept of Economic Affairs, DFS Secretary Anjuly Chib Duggal, Bharat Doshi, Nachiket Mor and former bureaucrat, Sudhir Mankad were present at the November 8, 2016 board meeting which cleared the demonetisation of high value notes.