Urjit Patel to face questions on note ban again

RBI Governor Urjit Patel will face questions related to demonetisation for the fourth time on November 12 when he appears before the Parliamentary Standing Committee of Finance headed by senior Congress leader M Veerappa Moily.

The Committee is meeting to discuss “demonetisation of Indian currency notes of Rs 500 and Rs 1,000 and ramifications thereof" as well as “The Banning of Unregulated Deposit Schemes Bill, 2018.”

Appearing before the panel last on June 12, Patel had sought more powers for RBI, when MPs posed tough questions to him on mounting bad loans and cash crunch in ATMs despite more money having returned to banks post demonetisation.

Last year, he had appeared before the panel in January and July.

In the November 12 meeting, the panel will ask the RBI governor about the latest report on demonetisation published by the RBI, which said that 98.96% of the demonetised currency notes of Rs 500 and Rs 1,000 denomination came back to the RBI after the note ban on November 8, 2016.

By the time the panel would be examining the RBI Governor next month, the second anniversary of demonetisation decision would have happened.

The panel has so far failed to adopt a report on demonetisation owing to differences on political line over the content of the report.

Hence, the panel will ask the RBI in details about impact of demonisation on Indian economy and how small-scale industries were hit and its impact elsewhere.

The panel will seek the RBI's response on complaints of cash crunch in the market, and will ask him to explain the troubles in Infrastructure Financing and Leasing Services that took down the stock market and created liquidity crises in the system.

The RBI governor will also be asked what was the central bank's role in preventing the non-banking financial companies (NBFC) crises, and why was the ILFS mess not spotted earlier.

In June this year, the panel had asked the RBI why it failed to prevent the PNB fraud.

A source in the committee told DH that the panel will also visit Mumbai next month and call newly appointed IL& FS board and SBI officials and seek their explanation on the IL&FS fiasco and steps taken to overhaul it.