Blaming the Reserve Bank of India Governor Urjit Patel for “misusing” the central bank to carry out demonetisation which “caused trouble to the common man”, D Thomas Franco, general secretary of All India Bank Officers Confederation has asked for Patel’s resignation. The union represents over 3.25 lakh officers from nationalised, old-generation private sector, cooperative and regional rural banks in India.
On the latest justifications being given by the RBI, Franco asked “what was that economics he (Governor Patel) learnt to roll out a financial policy like Demonetisation troubling the entire population?”
“All over the world, Central banks have an autonomy. Here, it appears that the autonomy of RBI is given up by the governor himself. RBI was being misused for declaring demonetisation. Shifting goal posts, now they are claiming of increased Income Tax filings as a benefit …The Governor should explain whether he really thought that India should increase IT filings through demonetisation. When IT department has many ways to punish defaulters, why did you punish the whole nation? …You should step down, sir, and restore people’s faith in the Central bank,” Franco said.
He added that RBI Governor should be held responsible for the huge losses and social cost due to the drive. “… … RBI has acted detrimental to the banking industry and services. The profit of RBI has come down by Rs 35,000 crore in one year…The note ban had also incurred huge losses to the individual banks as they were forced to recalibrate thousands of ATM machines…,”.
Franco added that the productivity of banking sector also was drastically affected by demonetisation.
“… how will RBI tackle the huge economic impacts on banking industry? … banks had to stop lending money, which is the key service. Exchange of currency, accounting them, packing and sending back to RBI, submission of so many returns and replying to queries with RBI and Income Tax departments were the only jobs possible … When lending was fully stopped, banks still had been paying a minimum of 4 per cent interest …The direct cost of note ban alone was around Rs 13,000 crore on banks. The government should be reimbursing this loss,” Franco said.