Why flip flops on demonetisation? This and 9 other key questions Urjit Patel needs to answer

The questionnaire includes every query starting from the decision-making process to the limits of involvement of the RBI, the effect on the nation's economy, and "flip-flops" in rules in the last two months.

The Public Accounts Committee (PAC), under the leadership of Congress leader K V Thomas, has asked 10 questions to Reserve Bank of India Governer Urjit Patel on demonetisation. The PAC has also asked the Governor to appear before it on January 28.

The questionnaire includes several questions starting from the decision-making process to the limits of involvement of the RBI, its effect on the nation’s economy, and “flip-flops” in rules in the last two months.

The questions were sent on December 30 in which the PAC wants to know the exact amount of currency demonetised and how much was returned to the banking system. As per a report in the Indian Express, the panel has also asked the RBI Governer why he should not be questioned or removed for “abuse of power of office” if there are no rules to restrict cash withdrawal.

Here is the questionnaire:

  1. Union Minister Piyush Goyal said in the House that it was RBI and its board’s decision to demonetise and the government merely acted upon this advice. Do you agree?
  2. If really it was RBI’s decision, then when did RBI exactly decide that demonetising currency will be in India’s best interests?
  3. RBI’s own estimates show fake/ counterfeit currency to be a mere Rs 500 crore. The cash to GDP of India was 12%, lower than Japan (18%) and Switzerland (13%). High denomination notes as a share of currency was 86% in India, but 90% in China and 81% in the US. So, what was so alarming that the RBI decided India needed to demonetise suddenly?
  4. What was the exact logic put by the RBI to declare Rs 500 and Rs 1000 notes as illegal tenders?
  5. When was the notice, for an emergency meeting on November 8, was sent to the RBI Board members? What was the duration of the meeting? Where are the minutes of the meeting?
  6. The notification issued by the RBI on November 8, 2016, under Section 3 c(v) restricted the cash withdrawal from a bank account over the counter to Rs 10,000 per day and Rs 20,000 per week. There was a similar limit of Rs 2,000 per day in an ATM. Under what law and powers of the RBI, were these limitations imposed on people to withdraw their own cash? From where did RBI get the powers to ration currency notes in the country? And if there are no such law that you can mention, why should you not be prosecuted and removed for abuse of power of office?
  7. Why there have been so many flip-flops in RBI regulations over the past two months? Who was behind drafting the notification on marriage related withdrawal? Who was the RBI officer who came up with the idea to ink people for withdrawal? If it was not the RBI that drafted these but the government, is the RBI now a department of Ministry of Finance?
  8. How much old currency have been demonetised and how much have been deposited back in old denominations? On November 8, when the government announced demonetisation, what was the currency amount expected to be extinguished?
  9. Why is the RBI not providing any information under RTI to queries? Why has the RBI refused to reveal information under the RTI, citing silly reasons such as fear of personal injury?
  10. In the subsequent note sent to the Cabinet recommending demonetisation, did the RBI mention that this decision would mean invalidating 86 percent of the nation’s currency and its attendant cost? How long would it take to remonetise?

Urjit Patel and RBI deputy Governors N S Vishwanathan and R Gandhi were questioned on demonetisation by the Rajya Sabha Standing Committee on Subordinate Legislation on January 6. As the sources said, Janata Dal (United) member Ali Anwar Ansari asked if the RBI already had the information then it is a “criminal negligence” as no required steps were taken to avoid the inconvenience faced by the people.