RBI Governor Urjit Patel today attributed the banks grappling with high bad loans to legacy issues saying they are mostly on account of credit facility provided for long-gestation projects before 2011-12.

He further said the problem of non-performing assets (NPAs) was earlier also but it is only recently that the issue is being recognised.

Patel said that sectors in which bad loans have emerged over the years pertain to long-gestation projects, which were mostly funded before 2011-12.

&quot;Therefore, ...By definition, this proportionate amount is a legacy issue, although the recognition and reporting of these have taken place only recently,&quot; the RBI Governor said.

Finance Minister Arun Jaitley after addressing the RBI board said a legal and executive framework to deal with NPAs has been put in place by the government as its resolution is an ongoing process.

Jaitley also said the bad loans figure has increased owing to emergence of some new NPAs or loans that have been continuing. Congress leader Veerappa Moily had recently raised the bad loans issue in Parliament and said the NPAs figure has grown since 2014.

&quot;I was in Parliament responding to a comment which Moily had made. What was figure in 2014, then 2015, 16, 17 it increased. So I had said these are all loans which have been continuing and what&#39;s have been added is either the discovery of some non-performing assets as a result of some exercise that RBI had directed to be undertaken and also the interest factor has increased,&quot; Jaitley said.

After the Asset Quality Review (AQR), there was huge surge in NPA. In the third quarter of the last fiscal alone, NPAs rose over Rs 1-lakh crore.

&quot;Now resolution of these is an ongoing process...Now for individual bankers to get into exercise of resolving each one of the pending issues,&quot; he said.

On when the RBI will be able to come out with the figures of scrapped notes which have been deposited with the banks, the Governor said the number that should divulge should be a verified number and a number that is congruent with the complex accounting.

&quot;Given that the window is open until March 31 and then at a lower level until June 30 we need to be careful and try as hard as possible that this is a number that is not a mere estimate but a verifiable number both physically and in accounting stance,&quot; he said.

Following the shock demonetisation announcement on November 8, the government had asked people to deposit old notes in banks by December 30.

Indians who were abroad during November 9 to December 30 have been given a 3-month grace period till March 31 to deposit the junked notes, while for the NRIs, it is 6 months till June 30.

Earlier this week, RBI Deputy Governor S S Mundra said the final numbers can only be revealed after counting the notes deposited in cooperative banks, receipt of information from Nepal and Bhutan and close of the window for deposit of notes by NRIs.

(PTI)

Patel said that sectors in which bad loans have emerged over the years pertain to long-gestation projects

RBI Governor Urjit Patel today attributed the banks grappling with high bad loans to legacy issues saying they are mostly on account of credit facility provided for long-gestation projects before 2011-12. He further said the problem of non-performing assets (NPAs) was earlier also but it is only recently that the issue is being recognised. Patel said that sectors in which bad loans have emerged over the years pertain to long-gestation projects, which were mostly funded before 2011-12. "Therefore, ...By definition, this proportionate amount is a legacy issue, although the recognition and reporting of these have taken place only recently," the RBI Governor said. Finance Minister Arun Jaitley after addressing the RBI board said a legal and executive framework to deal with NPAs has been put in place by the government as its resolution is an ongoing process. Jaitley also said the bad loans figure has increased owing to emergence of some new NPAs or loans that have been continuing. Congress leader Veerappa Moily had recently raised the bad loans issue in Parliament and said the NPAs figure has grown since 2014. "I was in Parliament responding to a comment which Moily had made. What was figure in 2014, then 2015, 16, 17 it increased. So I had said these are all loans which have been continuing and what's have been added is either the discovery of some non-performing assets as a result of some exercise that RBI had directed to be undertaken and also the interest factor has increased," Jaitley said. After the Asset Quality Review (AQR), there was huge surge in NPA. In the third quarter of the last fiscal alone, NPAs rose over Rs 1-lakh crore. "Now resolution of these is an ongoing process...Now for individual bankers to get into exercise of resolving each one of the pending issues," he said. On when the RBI will be able to come out with the figures of scrapped notes which have been deposited with the banks, the Governor said the number that should divulge should be a verified number and a number that is congruent with the complex accounting. "Given that the window is open until March 31 and then at a lower level until June 30 we need to be careful and try as hard as possible that this is a number that is not a mere estimate but a verifiable number both physically and in accounting stance," he said. Following the shock demonetisation announcement on November 8, the government had asked people to deposit old notes in banks by December 30. Indians who were abroad during November 9 to December 30 have been given a 3-month grace period till March 31 to deposit the junked notes, while for the NRIs, it is 6 months till June 30. Earlier this week, RBI Deputy Governor S S Mundra said the final numbers can only be revealed after counting the notes deposited in cooperative banks, receipt of information from Nepal and Bhutan and close of the window for deposit of notes by NRIs. (PTI)

Non-performing assets a legacy issue, RBI governor says

India&#39;s central bank, the Reserve Bank of India, announced today that there would be no restrictions on cash withdrawals from savings bank accounts from March 13.

The limit on withdrawals from savings bank accounts following Prime Minister Narendra Modi&#39;s move to demonetise old Rs 500 and Rs 1000 notes in November stands at Rs 24,000 per week.

The RBI said the limit on cash withdrawal from savings banks accounts would be relaxed in two stages. It would be increased to Rs 50,000 per week from February 20 and restrictions on withdrawals would be completely lifted from March 13. 
&nbsp;

<center>
<blockquote class="twitter-tweet" data-lang="en">
From 13 March there will be no limit on cash withdrawal from savings bank accounts: RBI
&mdash; ANI (@ANI_news) <a href="https://twitter.com/ANI_news/status/829259793051348993">February 8, 2017</a></blockquote>
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script></center>

The RBI had withdrawn the limits placed on daily cash withdrawal from ATMs and current accounts in the wake of demonetisation on February 1. The central bank had also removed all limits on cash withdrawals from current accounts, cash credit accounts, overdraft accounts on January 30.

PM Modi announced demonetisation on November 8 to curb the spread of black money and counterfeit currency and to bring unaccounted wealth into the mainstream economy. The government also placed a withdrawal limit of Rs 2000 a day in &nbsp;ATMs and Rs 10,000 per day and Rs 20,000 per week in banks in view of currency shortage following demonetisation.

These limits, however, were gradually eased with RBI pumping in new notes of Rs 500 and Rs 2000.&nbsp;

The withdrawal limit from ATMs was increased to Rs 4,500 per day from ATMs from January 1. The weekly withdrawal limit from banks stood at Rs 24,000. On January 16, the RBI again raised the cash withdrawal limit from ATMs to Rs 10,000

On January 16, the RBI again raised the cash withdrawal limit from ATMs to Rs 10,000 from Rs 4500 while keeping the weekly withdrawal limit from banks unchanged at Rs 24,000. It had also raised the current account withdrawl limit to Rs 1,00,000 from Rs 50,000. 
 
(WION) 
&nbsp;

The RBI said the limit on cash withdrawal from savings accounts would be increased to Rs 50,000 per week from February 20

India's central bank, the Reserve Bank of India, announced today that there would be no restrictions on cash withdrawals from savings bank accounts from March 13. The limit on withdrawals from savings bank accounts following Prime Minister Narendra Modi's move to demonetise old Rs 500 and Rs 1000 notes in November stands at Rs 24,000 per week. The RBI said the limit on cash withdrawal from savings banks accounts would be relaxed in two stages. It would be increased to Rs 50,000 per week from February 20 and restrictions on withdrawals would be completely lifted from March 13. From 13 March there will be no limit on cash withdrawal from savings bank accounts: RBI — ANI (@ANI_news) February 8, 2017 The RBI had withdrawn the limits placed on daily cash withdrawal from ATMs and current accounts in the wake of demonetisation on February 1. The central bank had also removed all limits on cash withdrawals from current accounts, cash credit accounts, overdraft accounts on January 30. PM Modi announced demonetisation on November 8 to curb the spread of black money and counterfeit currency and to bring unaccounted wealth into the mainstream economy. The government also placed a withdrawal limit of Rs 2000 a day in ATMs and Rs 10,000 per day and Rs 20,000 per week in banks in view of currency shortage following demonetisation. These limits, however, were gradually eased with RBI pumping in new notes of Rs 500 and Rs 2000. The withdrawal limit from ATMs was increased to Rs 4,500 per day from ATMs from January 1. The weekly withdrawal limit from banks stood at Rs 24,000. On January 16, the RBI again raised the cash withdrawal limit from ATMs to Rs 10,000 On January 16, the RBI again raised the cash withdrawal limit from ATMs to Rs 10,000 from Rs 4500 while keeping the weekly withdrawal limit from banks unchanged at Rs 24,000. It had also raised the current account withdrawl limit to Rs 1,00,000 from Rs 50,000. (WION)

No restrictions on withdrawals from savings bank accounts from March 13: RBI

The Reserve Bank of India (RBI) kept its repo rate on hold at 6.25 per cent for a second straight policy meeting, opting to wait for more clarity on inflation trends and on how a radical crackdown on &quot;black money&quot; is impacting economic growth.

The RBI&#39;s monetary policy committee on Wednesday voted 6-0, its third unanimous decision in a row since being established in September.

Before the meeting, analysts were split on what the RBI would do. In a Reuters poll last week, 28 of 46 participants saw the central bank cutting the repo rate by a quarter point and two expected a 50 bps cut.

But others correctly predicted the RBI would wait until its next policy review in April. 
 
(Reuters) 
&nbsp;

RBI is opting to wait for more clarity on inflation trends and on how a radical crackdown on 'black money' is impacting economic growth

The Reserve Bank of India (RBI) kept its repo rate on hold at 6.25 per cent for a second straight policy meeting, opting to wait for more clarity on inflation trends and on how a radical crackdown on "black money" is impacting economic growth. The RBI's monetary policy committee on Wednesday voted 6-0, its third unanimous decision in a row since being established in September. Before the meeting, analysts were split on what the RBI would do. In a Reuters poll last week, 28 of 46 participants saw the central bank cutting the repo rate by a quarter point and two expected a 50 bps cut. But others correctly predicted the RBI would wait until its next policy review in April. (Reuters)

RBI keeps repo rate unchanged at 6.25% for second meeting in a row

Indian shares retreated on Tuesday from four-month highs hit in the previous session as investors stayed on the sidelines ahead of the Reserve Bank of India&#39;s policy meeting.

Analysts expect the RBI to cut the repo rate by 25 basis points on Wednesday after December inflation hit a two-year low. But they warn it will be a close call since the central bank may even opt to maintain status quo until its next review in April.

RBI may keep rates unchanged as it continues to assess the impact of the crackdown on high-value notes on inflation, some analysts said.

Most Indian automakers were down, contributing to over three-fourths of Nifty&#39;s decline, with Tata Motors Ltd and Mahindra &amp; Mahindra Ltd falling as much as 2.4 per cent and 1.7 per cent respectively.

Banks have already slashed lending rates this year after deposits surged following the ban on high-denomination currency notes, reducing the need for further rate cuts.

&quot;I don&#39;t think that the RBI will cut interest rates this time,&quot; says Sangeeth V, an institutional sales trader with Paterson Securities.

&quot;Banks are already flush with funds post-demonetisation.&quot;

The broader Nifty was down 0.28 per cent at 8,777.30 as of 6:04 GMT while the benchmark 30-stock Sensex was trading 0.24 per cent lower at 28,371.40.

On Monday, both the indexes hit their highest since late September.

Among the gainers, ITC Ltd rose to a record high. Government-owned Specified Undertaking Of The Unit Trust Of India sold a two-percent stake in the country&#39;s biggest cigarette maker via block deals.

Railway coach maker Titagarh Wagons Ltd rose as much as 7 per cent after getting a contract worth one billion rupees from the Ministry of Earth Sciences. ($14.84 million).

(Reuters)

Analysts expect the RBI to cut the repo rate by 25 basis points on Wednesday after December inflation hit a two-year low

Indian shares retreated on Tuesday from four-month highs hit in the previous session as investors stayed on the sidelines ahead of the Reserve Bank of India's policy meeting. Analysts expect the RBI to cut the repo rate by 25 basis points on Wednesday after December inflation hit a two-year low. But they warn it will be a close call since the central bank may even opt to maintain status quo until its next review in April. RBI may keep rates unchanged as it continues to assess the impact of the crackdown on high-value notes on inflation, some analysts said. Most Indian automakers were down, contributing to over three-fourths of Nifty's decline, with Tata Motors Ltd and Mahindra & Mahindra Ltd falling as much as 2.4 per cent and 1.7 per cent respectively. Banks have already slashed lending rates this year after deposits surged following the ban on high-denomination currency notes, reducing the need for further rate cuts. "I don't think that the RBI will cut interest rates this time," says Sangeeth V, an institutional sales trader with Paterson Securities. "Banks are already flush with funds post-demonetisation." The broader Nifty was down 0.28 per cent at 8,777.30 as of 6:04 GMT while the benchmark 30-stock Sensex was trading 0.24 per cent lower at 28,371.40. On Monday, both the indexes hit their highest since late September. Among the gainers, ITC Ltd rose to a record high. Government-owned Specified Undertaking Of The Unit Trust Of India sold a two-percent stake in the country's biggest cigarette maker via block deals. Railway coach maker Titagarh Wagons Ltd rose as much as 7 per cent after getting a contract worth one billion rupees from the Ministry of Earth Sciences. ($14.84 million). (Reuters)

Sensex, Nifty trade lower ahead of RBI policy meet

India&#39;s central bank said on Monday that limits placed on daily cash withdrawal from&nbsp;ATMs and current accounts in the wake of demonetisation would be withdrawn from February 1.

RBI has also removed all limits on cash withdrawals from current accounts, cash credit accounts, overdraft accounts with immediate effect. 
 
India&#39;s central bank added that the weekly limit of Rs 24,000 on cheque withdrawals from savings bank accounts will continue, but promised to review this in the near future depending on the pace of remonetisation.&nbsp;PTI reported. 
 
&quot;The limits on Savings Bank accounts will continue for the present and are under consideration for withdrawal in the near future,&quot; it said.

Banks, however, have been asked to fix their own limits, was the case before the demonetisation of Rs 500 and Rs 1000 notes on November 8, 2016. 
&nbsp;

<div class="ui-state-default" contenteditable="false">
<div class="twitter-block" draggable="false">
<center>
<blockquote class="twitter-tweet" data-lang="en">
RBI: Limits on Cash withdrawals from Bank accounts and ATMs - Restoration of status quo ante
&mdash; ANI (@ANI_news) <a href="https://twitter.com/ANI_news/status/826032687286677504">January 30, 2017</a></blockquote>
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script></center>
</div>
<a class="close-mark close-div" href="#" id="jqclosemark">&times;</a></div>

<div class="ui-state-default" contenteditable="false">
<div class="twitter-block" draggable="false">
<center>
<blockquote class="twitter-tweet" data-lang="en">
Limits placed on cash withdrawals from Current accounts/ Cash credit accounts/ Overdraft accounts stand withdrawn with immediate effect: RBI
&mdash; ANI (@ANI_news) <a href="https://twitter.com/ANI_news/status/826032938051465216">January 30, 2017</a></blockquote>
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script></center>
</div>
<a class="close-mark close-div" href="#" id="jqclosemark">&times;</a></div>

&nbsp;

<div class="ui-state-default" contenteditable="false">
<div class="twitter-block" draggable="false">
<center>
<blockquote class="twitter-tweet" data-lang="en">
Limits placed on cash withdrawals from ATMs stand withdrawn from Feb 01. Banks may,at their discretion,have their own operating limits:RBI
&mdash; ANI (@ANI_news) <a href="https://twitter.com/ANI_news/status/826033290113003521">January 30, 2017</a></blockquote>
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script></center>
</div>
<a class="close-mark close-div" href="#" id="jqclosemark">&times;</a></div>

&nbsp;

It further said that banks have been &quot;urged to encourage their constituents to sustain the movement towards digitisation of payments and switching over of payments from cash mode to non-cash mode.&quot;

In a surprise move, PM Modi announced demonetisation&nbsp;on November 8 to curb the spread of black money and counterfeit currency and to bring unaccounted wealth into the mainstream economy. The government also placed a withdrawal limit of Rs 2000 a day in &nbsp;ATMs and Rs 10,000 per day and Rs 20,000 per week in banks&nbsp;in view of currency shortage following demonetisation.

These limits, however, were gradually eased with RBI pumping in new notes of Rs 500 and Rs 2000.&nbsp;

The withdrawal limit from ATMs was increased to Rs 4,500 per day from ATMs from January 1. The weekly withdrawal limit from banks stood at Rs 24,000. On January 16, the RBI again raised the cash withdrawal limit from ATMs to Rs 10,000

On January 16, the RBI again raised the cash withdrawal limit from ATMs to Rs 10,000 from Rs 4500 while keeping the weekly withdrawl limit from banks unchanged at Rs 24,000. It had also raised the current account withdrawl limit to Rs 1,00,000 from Rs 50,000. 
&nbsp;

(WION with inputs from ANI)

The RBI said the weekly limit of Rs 24,000 on cheque withdrawals from savings bank accounts will continue

India's central bank said on Monday that limits placed on daily cash withdrawal from ATMs and current accounts in the wake of demonetisation would be withdrawn from February 1. RBI has also removed all limits on cash withdrawals from current accounts, cash credit accounts, overdraft accounts with immediate effect. India's central bank added that the weekly limit of Rs 24,000 on cheque withdrawals from savings bank accounts will continue, but promised to review this in the near future depending on the pace of remonetisation. PTI reported. "The limits on Savings Bank accounts will continue for the present and are under consideration for withdrawal in the near future," it said. Banks, however, have been asked to fix their own limits, was the case before the demonetisation of Rs 500 and Rs 1000 notes on November 8, 2016. RBI: Limits on Cash withdrawals from Bank accounts and ATMs - Restoration of status quo ante — ANI (@ANI_news) January 30, 2017 × Limits placed on cash withdrawals from Current accounts/ Cash credit accounts/ Overdraft accounts stand withdrawn with immediate effect: RBI — ANI (@ANI_news) January 30, 2017 × Limits placed on cash withdrawals from ATMs stand withdrawn from Feb 01. Banks may,at their discretion,have their own operating limits:RBI — ANI (@ANI_news) January 30, 2017 × It further said that banks have been "urged to encourage their constituents to sustain the movement towards digitisation of payments and switching over of payments from cash mode to non-cash mode." In a surprise move, PM Modi announced demonetisation on November 8 to curb the spread of black money and counterfeit currency and to bring unaccounted wealth into the mainstream economy. The government also placed a withdrawal limit of Rs 2000 a day in ATMs and Rs 10,000 per day and Rs 20,000 per week in banks in view of currency shortage following demonetisation. These limits, however, were gradually eased with RBI pumping in new notes of Rs 500 and Rs 2000. The withdrawal limit from ATMs was increased to Rs 4,500 per day from ATMs from January 1. The weekly withdrawal limit from banks stood at Rs 24,000. On January 16, the RBI again raised the cash withdrawal limit from ATMs to Rs 10,000 On January 16, the RBI again raised the cash withdrawal limit from ATMs to Rs 10,000 from Rs 4500 while keeping the weekly withdrawl limit from banks unchanged at Rs 24,000. It had also raised the current account withdrawl limit to Rs 1,00,000 from Rs 50,000. (WION with inputs from ANI)

No limit on cash withdrawal from ATMs February 1 onwards: India's central bank

India&#39;s central bank, the Reserve Bank of India (RBI) on Sunday rejected the Election Commission&#39;s request to enhance the weekly cash-withdrawal limit for candidates contesting the upcoming&nbsp;elections in five states,&nbsp;prompting an angry reaction from the poll panel. 
 
The Election Commission had written to the RBI on Wednesday, asking it to increase the weekly withdrawal limit for candidates contesting the assembly elections to Rs 2 lakh from Rs 24,000 per week. It had asked for the facility to be extended till March 11, the day of counting. The EC wrote another letter to the RBI on Friday (January 28), expressing its concern at the &#39;&ccedil;ursory manner&#39; in which the central bank was dealing with the issue.

<div class="ui-state-default" contenteditable="false">
<div class="twitter-block" draggable="false">
<center>
<blockquote class="twitter-tweet" data-lang="en">
EC wrote to RBI Governor Urjit Patel on issue of cash withdrawal limits for candidates <a href="https://t.co/b7RkWsbyKN">pic.twitter.com/b7RkWsbyKN</a>
&mdash; ANI (@ANI_news) <a href="https://twitter.com/ANI_news/status/825658363690180608">January 29, 2017</a></blockquote>
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script></center>
</div>
<a class="close-mark close-div" href="#" id="jqclosemark">&times;</a></div>

&nbsp;

Candidates are bound to open an election account for meeting poll-related expenditure which is monitored by the poll panel.

But RBI said that it was not possible for it to hike the limit at this stage.

An apparently peeved Commission has now written back to RBI Governor Urjit Patel expressing &quot;serious concern about the cursory manner in which the issue has been dealt with&quot;.

&quot;...(It) appears that the RBI has not realised the gravity of the situation...It is reiterated that it is the constitutional mandate of the Commission to conduct free and fair elections and to provide level-playing field to all candidates...In order to facilitate proper conduct of elections, it is imperative that directions issued by the Commission are complied with,&quot; the poll panel said.

It urged the central bank to reconsider the proposal.

The Commission had told RBI Governor Urjit Patel that it has been apprised of the problems candidates were facing due to withdrawal limits imposed after demonetisation, PTI had reported.&nbsp; 
 
The poll panel&nbsp;said with a weekly withdrawal limit of Rs 24,000, a candidate would be able to withdraw Rs 96,000 in cash during the election process which lasts for three&nbsp;to four weeks.&nbsp;

It reminded the Central bank that as per law, candidates contesting assembly polls in Uttar Pradesh, Uttarakhand and Punjab can spend Rs 28 lakh for electioneering. The limit in Goa and Manipur is Rs 20 lakh.&nbsp;

(WION with inputs from PTI)

The RBI rejected the Election Commission's request to increase the withdrawal limit. A peeved EC has has now written back to RBI Governor

India's central bank, the Reserve Bank of India (RBI) on Sunday rejected the Election Commission's request to enhance the weekly cash-withdrawal limit for candidates contesting the upcoming elections in five states, prompting an angry reaction from the poll panel. The Election Commission had written to the RBI on Wednesday, asking it to increase the weekly withdrawal limit for candidates contesting the assembly elections to Rs 2 lakh from Rs 24,000 per week. It had asked for the facility to be extended till March 11, the day of counting. The EC wrote another letter to the RBI on Friday (January 28), expressing its concern at the 'çursory manner' in which the central bank was dealing with the issue. EC wrote to RBI Governor Urjit Patel on issue of cash withdrawal limits for candidates pic.twitter.com/b7RkWsbyKN — ANI (@ANI_news) January 29, 2017 × Candidates are bound to open an election account for meeting poll-related expenditure which is monitored by the poll panel. But RBI said that it was not possible for it to hike the limit at this stage. An apparently peeved Commission has now written back to RBI Governor Urjit Patel expressing "serious concern about the cursory manner in which the issue has been dealt with". "...(It) appears that the RBI has not realised the gravity of the situation...It is reiterated that it is the constitutional mandate of the Commission to conduct free and fair elections and to provide level-playing field to all candidates...In order to facilitate proper conduct of elections, it is imperative that directions issued by the Commission are complied with," the poll panel said. It urged the central bank to reconsider the proposal. The Commission had told RBI Governor Urjit Patel that it has been apprised of the problems candidates were facing due to withdrawal limits imposed after demonetisation, PTI had reported. The poll panel said with a weekly withdrawal limit of Rs 24,000, a candidate would be able to withdraw Rs 96,000 in cash during the election process which lasts for three to four weeks. It reminded the Central bank that as per law, candidates contesting assembly polls in Uttar Pradesh, Uttarakhand and Punjab can spend Rs 28 lakh for electioneering. The limit in Goa and Manipur is Rs 20 lakh. (WION with inputs from PTI)

India's central bank, poll panel spar over enhancing cash withdrawal limit for election candidates

India pushed ahead with its decision to scrap banknotes even as the Reserve Bank of India&#39;s (RBI) own board expressed concern whether the cash could be replaced quickly enough, the central bank has said in written testimony to parliament.

The revelation comes amid growing criticism about whether the central bank and the government had sufficiently assessed the potential fallout from the November 8 ban of about 86 per cent of the cash then in circulation.

Prime Minister Narendra Modi&#39;s shock move caused a severe cash shortage that brought large parts of the economy to a virtual standstill, as the central bank struggled to print new 500-rupee and 2,000-rupee notes to replace the old currency.

A copy of the private testimony to a parliament panel, seen by Reuters, showed the central bank had also warned the government of &quot;possible inconvenience to the public for some time,&quot; among the potential consequences of the massive exercise.

Despite its own doubts, the testimony showed, the RBI board approved the plan to ban 500-rupee and 1,000-rupee notes, as it believed the move would rein in counterfeiting and reliance on cash, and pull unaccounted cash into the financial system.

&quot;It might not immediately be possible to replace these notes fully in terms of both value and volume,&quot; the board felt at a meeting ahead of Modi&#39;s November 8 announcement, according to the central bank submission.

But the RBI&#39;s board ultimately believed that &quot;corrective&quot; action could be taken and decided to recommend the move, the document showed. The RBI also believed the impact of such an exercise would be &quot;transitory&quot;, given its efforts to quickly replace the old notes, it said in the testimony.

The RBI&#39;s endorsement of the government action has drawn strong criticism from several former policymakers, including former Prime Minister Manmohan Singh, the architect of India&#39;s 1991 financial reforms and a former central bank governor.

The document also notes the proposal to ban the cash had come from the government, in a letter a day before the announcement that advised the RBI to &quot;immediately&quot; put the plan before its board for approval.

Under India&#39;s RBI Act, such a move was necessary.

The central bank did not immediately respond to Reuters` request for comments on its submission to parliament.

&quot;Painful&quot; for RBI

Since Modi declared the ban, the central bank has been forced to announce a barrage of measures to soften the impact, including several high-profile reversals, undermining confidence in it.

In a letter to RBI Governor Urjit Patel, unions of central bank employees called such criticism &quot;painful&quot;, and accused the government of steering decisions behind the replacement of the banned notes, saying that &quot;blatantly encroaches&quot; on the central bank&#39;s jurisdiction.

The government, however, has denied it was taking the decisions during the implementation, saying that it was merely cooperating with the RBI and reiterating that it fully respected the autonomy of the central bank.

Power and Coal Minister Piyush Goyal said such cooperation was necessary, since it involved an unprecedented &quot;exercise&quot; and that the flurry of action showed India`s flexibility in taking the necessary measures.&nbsp;

&quot;They never had got an experience of this kind of a war-type situation,&quot; Goyal said, referring to the RBI. &quot;So, every organization which is doing this is doing it for the first time. You will learn as you go along.&quot;

Previous banknote bans have not had such a dramatic impact as they removed only a small fraction of cash from circulation.&nbsp;

(Reuters) 
&nbsp;

The RBI clarified that it ultimately believed that 'corrective' action could be taken and decided to recommend the move

India pushed ahead with its decision to scrap banknotes even as the Reserve Bank of India's (RBI) own board expressed concern whether the cash could be replaced quickly enough, the central bank has said in written testimony to parliament. The revelation comes amid growing criticism about whether the central bank and the government had sufficiently assessed the potential fallout from the November 8 ban of about 86 per cent of the cash then in circulation. Prime Minister Narendra Modi's shock move caused a severe cash shortage that brought large parts of the economy to a virtual standstill, as the central bank struggled to print new 500-rupee and 2,000-rupee notes to replace the old currency. A copy of the private testimony to a parliament panel, seen by Reuters, showed the central bank had also warned the government of "possible inconvenience to the public for some time," among the potential consequences of the massive exercise. Despite its own doubts, the testimony showed, the RBI board approved the plan to ban 500-rupee and 1,000-rupee notes, as it believed the move would rein in counterfeiting and reliance on cash, and pull unaccounted cash into the financial system. "It might not immediately be possible to replace these notes fully in terms of both value and volume," the board felt at a meeting ahead of Modi's November 8 announcement, according to the central bank submission. But the RBI's board ultimately believed that "corrective" action could be taken and decided to recommend the move, the document showed. The RBI also believed the impact of such an exercise would be "transitory", given its efforts to quickly replace the old notes, it said in the testimony. The RBI's endorsement of the government action has drawn strong criticism from several former policymakers, including former Prime Minister Manmohan Singh, the architect of India's 1991 financial reforms and a former central bank governor. The document also notes the proposal to ban the cash had come from the government, in a letter a day before the announcement that advised the RBI to "immediately" put the plan before its board for approval. Under India's RBI Act, such a move was necessary. The central bank did not immediately respond to Reuters` request for comments on its submission to parliament. "Painful" for RBI Since Modi declared the ban, the central bank has been forced to announce a barrage of measures to soften the impact, including several high-profile reversals, undermining confidence in it. In a letter to RBI Governor Urjit Patel, unions of central bank employees called such criticism "painful", and accused the government of steering decisions behind the replacement of the banned notes, saying that "blatantly encroaches" on the central bank's jurisdiction. The government, however, has denied it was taking the decisions during the implementation, saying that it was merely cooperating with the RBI and reiterating that it fully respected the autonomy of the central bank. Power and Coal Minister Piyush Goyal said such cooperation was necessary, since it involved an unprecedented "exercise" and that the flurry of action showed India`s flexibility in taking the necessary measures. "They never had got an experience of this kind of a war-type situation," Goyal said, referring to the RBI. "So, every organization which is doing this is doing it for the first time. You will learn as you go along." Previous banknote bans have not had such a dramatic impact as they removed only a small fraction of cash from circulation. (Reuters)

Govt went ahead with demonetisation despite 'central bank concerns'

Supporting the letter written by the Reserve Bank of India (RBI) employees to Governor Urjit Patel protesting against operational &quot;mismanagement&quot; post demonetisation, Congress leader Kapil Sibal has said that the RBI was created to be independent of the government which has now been interfered during the drive.

&quot;RBI is created to be entirely independent of the government and this tradition is sought to be interfered with and I think that the feeling of the establishments are justified,&quot; Sibal told ANI.

Further commenting on the silence maintained by RBI governor over the same, Sibal said that the former may have done some things which require being silent.

In a letter, the employees said that the autonomy and image of RBI had been &quot;dented beyond repair&quot; due to mismanagement and termed the appointment of a senior Finance Ministry official for currency coordination as a &quot;blatant encroachment&quot; of the RBI`s exclusive turf.

In a strongly worded letter addressed to Reserve Bank of India (RBI) Governor Urjit Patel, the United Forum of Reserve Bank Officers and Employees have alleged that post the government&#39;s demonetisation move, the image of the Central bank has been dented beyond repair.

&quot;We request the Governor of the RBI, its highest functionary and protector of its autonomy and prestige, to do the needful urgently to do away with this unwarranted interference from the Finance Ministry and assure the staff accordingly as the staff feels humiliated,&quot; the letter added.

Various employee unions of the central bank have objected to the government &quot;impinging on RBI autonomy&quot; and have written to Patel to take action against the &quot;unwarranted interference&quot;.

Meanwhile, the Finance Ministry has clarified its stand stating that the Government fully respects the independence and autonomy of the Central Bank.

In a statement, the Ministry said that consultations between the Centre and the RBI are undertaken on various matters of public importance, wherever such consultation is mandated by law or has evolved as a practice. &quot;Consultations mandated by law or as evolved by practice should not be taken as infringement of autonomy of RBI,&quot; the statement added.

(ANI)&nbsp;

Referring to the letter written by RBI employees to the bank's Governor, Sibal said the feeling of the establishments was justified

Supporting the letter written by the Reserve Bank of India (RBI) employees to Governor Urjit Patel protesting against operational "mismanagement" post demonetisation, Congress leader Kapil Sibal has said that the RBI was created to be independent of the government which has now been interfered during the drive. "RBI is created to be entirely independent of the government and this tradition is sought to be interfered with and I think that the feeling of the establishments are justified," Sibal told ANI. Further commenting on the silence maintained by RBI governor over the same, Sibal said that the former may have done some things which require being silent. In a letter, the employees said that the autonomy and image of RBI had been "dented beyond repair" due to mismanagement and termed the appointment of a senior Finance Ministry official for currency coordination as a "blatant encroachment" of the RBI`s exclusive turf. In a strongly worded letter addressed to Reserve Bank of India (RBI) Governor Urjit Patel, the United Forum of Reserve Bank Officers and Employees have alleged that post the government's demonetisation move, the image of the Central bank has been dented beyond repair. "We request the Governor of the RBI, its highest functionary and protector of its autonomy and prestige, to do the needful urgently to do away with this unwarranted interference from the Finance Ministry and assure the staff accordingly as the staff feels humiliated," the letter added. Various employee unions of the central bank have objected to the government "impinging on RBI autonomy" and have written to Patel to take action against the "unwarranted interference". Meanwhile, the Finance Ministry has clarified its stand stating that the Government fully respects the independence and autonomy of the Central Bank. In a statement, the Ministry said that consultations between the Centre and the RBI are undertaken on various matters of public importance, wherever such consultation is mandated by law or has evolved as a practice. "Consultations mandated by law or as evolved by practice should not be taken as infringement of autonomy of RBI," the statement added. (ANI)

RBI was created to be independent of the Centre: Kapil Sibal

RBI employees who felt &ldquo;humiliated&rdquo; by events since the demonetisation move on Friday wrote a letter to RBI chief Urjit Patel against operational &quot;mismanagement&quot; in the exercise, the Press Trust of India reported.

In a letter addressed to Patel, they termed the appointment of a senior finance ministry official as a &quot;blatant encroachment&quot; on RBI&rsquo;s exclusive jurisdiction on currency management and accused the government of &quot;impinging on RBI autonomy&quot;.

&quot;An image of efficiency and independence that RBI assiduously built up over decades by the strenuous efforts of its staff and judicious policy making has gone into smithereens in no time. We feel extremely pained,&quot; the United Forum of Reserve Bank Officers and Employees said in the letter.

The letter also said the RBI&#39;s autonomy and image have been &ldquo;dented beyond repair&quot;.

At least two of the four signatories, Samir Ghosh of All India Reserve Bank Employees&#39; Association and Suryakant Mahadik of All India Reserve Bank Workers&#39; Federation, confirmed the writing of the letter, PTI reported.

The other signatories are CM Paulsil of All India Reserve Bank Officers&#39; Association and RN Vatsa of RBI Officers&#39; Association.

&quot;May we request that as the Governor of RBI, its highest functionary, and protector of its autonomy and prestige, you will please do the needful urgently to do away with this unwarranted interference from the Ministry of Finance, and assure the staff accordingly, as the staff feel humiliated,&quot; the letter said.

&ldquo;We want to reiterate that the RBI is fully capable of coordinating its currency chest operations. We do not need assistance from anywhere,&rdquo; the forum leaders said.

(WION with inputs from PTI)

Their letter complained about the operational 'mismanagement' of demonetisation and the government impinging on the central bank's autonomy

RBI employees who felt “humiliated” by events since the demonetisation move on Friday wrote a letter to RBI chief Urjit Patel against operational "mismanagement" in the exercise, the Press Trust of India reported. In a letter addressed to Patel, they termed the appointment of a senior finance ministry official as a "blatant encroachment" on RBI’s exclusive jurisdiction on currency management and accused the government of "impinging on RBI autonomy". "An image of efficiency and independence that RBI assiduously built up over decades by the strenuous efforts of its staff and judicious policy making has gone into smithereens in no time. We feel extremely pained," the United Forum of Reserve Bank Officers and Employees said in the letter. The letter also said the RBI's autonomy and image have been “dented beyond repair". At least two of the four signatories, Samir Ghosh of All India Reserve Bank Employees' Association and Suryakant Mahadik of All India Reserve Bank Workers' Federation, confirmed the writing of the letter, PTI reported. The other signatories are CM Paulsil of All India Reserve Bank Officers' Association and RN Vatsa of RBI Officers' Association. "May we request that as the Governor of RBI, its highest functionary, and protector of its autonomy and prestige, you will please do the needful urgently to do away with this unwarranted interference from the Ministry of Finance, and assure the staff accordingly, as the staff feel humiliated," the letter said. “We want to reiterate that the RBI is fully capable of coordinating its currency chest operations. We do not need assistance from anywhere,” the forum leaders said. (WION with inputs from PTI)

'Humiliated' RBI staff write to Urjit Patel, say bank's image 'dented beyond repair'

The Indian government has refuted allegations of interference in the functioning of the country&#39;s central bank, the Reserve Bank of India, stating it fully respects the independence and autonomy of the RBI.&nbsp;

The finance ministry was responding to allegations of an RBI union which accused it of infinging on the central bank&#39;s autonomy by appointing an official for currency coordination, PTI reported.

&quot;Consultations between the government and RBI are undertaken on various matters of public importance wherever such consultation is mandated by law or has evolved as a practice. Consultations mandated by law or as evolved by practice should not be taken as infringement of autonomy of RBI,&quot; the finance ministry said in a statement.

&quot;It is categorically stated that the government fully respects independence and autonomy of the Reserve Bank of India,&quot; the ministry said.

In a letter to RBI Governor Urjit Patel, the United Forum of Reserve Bank Officers and Employees had stated that employees were feeling &quot;humiliated&quot; by events since demonetisation because of &quot;blatant encroachment&quot; on RBI&rsquo;s exclusive jurisdiction on currency management.

The letter also said the RBI&#39;s autonomy and image have been &ldquo;dented beyond repair&quot;.

The union raised the issue after at least three former governors &nbsp;&mdash; &nbsp;Manmohan Singh (former prime minister), Bimal Jalan and Y V Reddy &nbsp;&mdash; &nbsp;flagged concerns about the central bank&#39;s functioning. Former deputy governors, including Usha Thorat and K C Chakrabarty too have voiced their worries.

&quot;An image of efficiency and independence that RBI assiduously built up over decades by the strenuous efforts of its staff and judicious policy making has gone into smithereens in no time. We feel extremely pained,&quot; the employees said in the letter.

The letter said the RBI staff has carried out its job excellently after the move to ban 87 per cent of the outstanding currency by the government.

(WION with inputs from PTI)

 
&nbsp;

The finance ministry clarified that consultations between the government and RBI on matters of public importance should not be taken as an infringement of autonomy

The Indian government has refuted allegations of interference in the functioning of the country's central bank, the Reserve Bank of India, stating it fully respects the independence and autonomy of the RBI. The finance ministry was responding to allegations of an RBI union which accused it of infinging on the central bank's autonomy by appointing an official for currency coordination, PTI reported. "Consultations between the government and RBI are undertaken on various matters of public importance wherever such consultation is mandated by law or has evolved as a practice. Consultations mandated by law or as evolved by practice should not be taken as infringement of autonomy of RBI," the finance ministry said in a statement. "It is categorically stated that the government fully respects independence and autonomy of the Reserve Bank of India," the ministry said. In a letter to RBI Governor Urjit Patel, the United Forum of Reserve Bank Officers and Employees had stated that employees were feeling "humiliated" by events since demonetisation because of "blatant encroachment" on RBI’s exclusive jurisdiction on currency management. The letter also said the RBI's autonomy and image have been “dented beyond repair". The union raised the issue after at least three former governors — Manmohan Singh (former prime minister), Bimal Jalan and Y V Reddy — flagged concerns about the central bank's functioning. Former deputy governors, including Usha Thorat and K C Chakrabarty too have voiced their worries. "An image of efficiency and independence that RBI assiduously built up over decades by the strenuous efforts of its staff and judicious policy making has gone into smithereens in no time. We feel extremely pained," the employees said in the letter. The letter said the RBI staff has carried out its job excellently after the move to ban 87 per cent of the outstanding currency by the government. (WION with inputs from PTI)

Indian govt respects central bank's autonomy, says finance ministry amid row

The chief of India&#39;s central bank on Wednesday warned the federal government that not wresting a ballooning fiscal deficit might cause long-term economic damage.

Reserve Bank of India governor Urjit Patel said not reducing the high borrowing levels was also hampering the country&#39;s sovereign ratings.

Patel, speaking at an investors&#39; summit in India&#39;s western Gujarat state, said both the federal government and state governments had to &quot;take cognisance&quot; of the matter to &quot;mitigate financial volatility&quot; in near future.

India&#39;s total fiscal deficit is targeted at 6.4 per cent of GDP in 2016-17, which is above the norm for most emerging markets and G20 countries. In comparison, China&#39;s government deficit was a little above two percentage points in 2016.

Patel&#39;s comments come weeks before the Narendra Modi administration is set to announce its annual budget.&nbsp;

The high debt burden has also scuttled India&#39;s chance of upgrading credit rating. Recently, Reuters had reported that the Indian government had pushed Moody&#39;s to get a better rating from its existing Baa3 rating -- the lowest investment grade.

But the international credit rating agency remained unmoved, with&nbsp;the company&#39;s senior vice president and sovereign analyst&nbsp;Marie Diron reasoning that high debt levels and the saddled banking sector&nbsp;were key reasons for the status quo.

(WION with inputs from Reuters)

&nbsp;

India's total fiscal deficit is targeted at 6.4 per cent of GDP in 2016-17, which is higher than most G20 countries

The chief of India's central bank on Wednesday warned the federal government that not wresting a ballooning fiscal deficit might cause long-term economic damage. Reserve Bank of India governor Urjit Patel said not reducing the high borrowing levels was also hampering the country's sovereign ratings. Patel, speaking at an investors' summit in India's western Gujarat state, said both the federal government and state governments had to "take cognisance" of the matter to "mitigate financial volatility" in near future. India's total fiscal deficit is targeted at 6.4 per cent of GDP in 2016-17, which is above the norm for most emerging markets and G20 countries. In comparison, China's government deficit was a little above two percentage points in 2016. Patel's comments come weeks before the Narendra Modi administration is set to announce its annual budget. The high debt burden has also scuttled India's chance of upgrading credit rating. Recently, Reuters had reported that the Indian government had pushed Moody's to get a better rating from its existing Baa3 rating -- the lowest investment grade. But the international credit rating agency remained unmoved, with the company's senior vice president and sovereign analyst Marie Diron reasoning that high debt levels and the saddled banking sector were key reasons for the status quo. (WION with inputs from Reuters)

Reduce borrowing levels to avoid economic volatility, warns RBI

The Public Accounts Committee (PAC) of Parliament can call Prime Minister Narendra Modi on the issue of demonetisation if it is not satisfied with the answers given by top finance ministry officials and the RBI Governor Urjit Patel, to whom a detailed questionnaire has been sent.

A PAC meeting on this issue has been called on January 20th, in which the Reserve Bank of Indian (RBI) Governor Urjit Patel, Finance Secretary Ashok Lavasa and Economic Affairs Secretary Shaktikanta Das will be present.

&quot;We have not yet received answers for the questions we have sent to them. They will reply few days before the January 20th meeting. Their replies will be discussed in detail,&quot; PAC Chairman and senior Congress leader K V Thomas told PTI.

Asked if the PAC would call the Prime Minister if replies were not satisfactory, he said: &quot;The committee has all right to 
call anybody involved in the matter. But that will depend on the outcome of the January 20th meeting. We can call PM on demonetisation issue if members unanimously decide.&quot;

In a meeting with the PM after demonetisation announcement made on November 8, Thomas said, &quot;I had met him and he said that the situation will be normal after 50 days by December-end. But it does not looks like&quot;.

So, PAC decided to call the top officials involved in the decision making process this month, he said, adding that the demonetisation has impacted the country&#39;s economy.

&quot;The PM is misleading the country to satisfy his ego. He is trying to justify his wrong decisions. He has done in a callous manner by introducing Rs 2,000 notes,&quot; he said.

&quot;In a country where there is a call drop problem and telecom facilities are not smooth, how can PM expect e-transactions would take place on mobiles. Do we have sufficient infrastructure?&quot; he questioned.

Asked what kind of questionnaire been sent to the RBI chief and top finance ministry officials, Thomas said that the PAC has raised questions on all aspects of demonetisation.

Among key questions sought are:&nbsp;Who were involved in the decision-making, how much money has come back into banks after demonetisation, is there a law that can restrict people&#39;s access their money, how much money has been pumped back into the system, if black money issue has been addressed and the impact on the economy and poor.

The PAC, which scrutinises the reports of the Comptroller and Auditor General (CAG), takes suo motu note of the important matters.

(PTI)

If unsatisfied with answers given by RBI Governor Urjit Patel to a detailed questionnaire on demonetisation, Modi himself will be called on

The Public Accounts Committee (PAC) of Parliament can call Prime Minister Narendra Modi on the issue of demonetisation if it is not satisfied with the answers given by top finance ministry officials and the RBI Governor Urjit Patel, to whom a detailed questionnaire has been sent. A PAC meeting on this issue has been called on January 20th, in which the Reserve Bank of Indian (RBI) Governor Urjit Patel, Finance Secretary Ashok Lavasa and Economic Affairs Secretary Shaktikanta Das will be present. "We have not yet received answers for the questions we have sent to them. They will reply few days before the January 20th meeting. Their replies will be discussed in detail," PAC Chairman and senior Congress leader K V Thomas told PTI. Asked if the PAC would call the Prime Minister if replies were not satisfactory, he said: "The committee has all right to call anybody involved in the matter. But that will depend on the outcome of the January 20th meeting. We can call PM on demonetisation issue if members unanimously decide." In a meeting with the PM after demonetisation announcement made on November 8, Thomas said, "I had met him and he said that the situation will be normal after 50 days by December-end. But it does not looks like". So, PAC decided to call the top officials involved in the decision making process this month, he said, adding that the demonetisation has impacted the country's economy. "The PM is misleading the country to satisfy his ego. He is trying to justify his wrong decisions. He has done in a callous manner by introducing Rs 2,000 notes," he said. "In a country where there is a call drop problem and telecom facilities are not smooth, how can PM expect e-transactions would take place on mobiles. Do we have sufficient infrastructure?" he questioned. Asked what kind of questionnaire been sent to the RBI chief and top finance ministry officials, Thomas said that the PAC has raised questions on all aspects of demonetisation. Among key questions sought are: Who were involved in the decision-making, how much money has come back into banks after demonetisation, is there a law that can restrict people's access their money, how much money has been pumped back into the system, if black money issue has been addressed and the impact on the economy and poor. The PAC, which scrutinises the reports of the Comptroller and Auditor General (CAG), takes suo motu note of the important matters. (PTI)

Demonetisation: Parliamentary committee may summon Indian PM Narendra Modi

A parliamentary committee has asked the governor of India&#39;s central bank to appear before it and explain how the decision of demonetisation was taken and for details on how it has impacted the economy, Reuters reported.

The Public Accounts Committee (PAC), which is probing the government&#39;s decision to scrap high-value Rs 500 and Rs 1000 bank notes (($7.34-$14.69) has asked Reserve Bank of India (RBI) governor, Urjit Patel, to appear before it on January 20, the commmitte&#39;s chairman, KV Thomas, also a senior member of the opposition Congress party, told Reuters.

The PAC has asked Patel to provide details on the value of currency that has been returned to the bank, the quantity of 
&quot;black money&quot; it has received and the amount of new currency released so far, Thomas said.

The committee has sent the RBI governor a list of questions on the demonetisation process. It has also asked other finance ministry officials, including the revenue secretary and finance secretary to appear before it, Thomas said.

In an unexpected move, PM Modi announced the demonetisation of Rs 500 and Rs 1000 notes on November 8 to curb the influence of black money circulating in the economy.

The opposition parties have criticised the government and the central bank over shortages of new currency notes and restrictions on depositing old notes that have caused long queues at banks and ATMs.

Thomas added that the governor has also been asked about the country&#39;s preparedness to handle cashless transactions.

&quot;We had decided to call the RBI governor sometime in December but because the prime minister had asked for 50 days, we 
decided to postpone it to sometime January,&quot; Thomas told Reuters. &quot;We did not want to give it a political colour.&quot;

Urijit Patel is already set to testify before another parliamentary committee on the demonetisation issue.

Last month, the RBI unexpectedly kept its key policy rate unchanged at 6.25 per cent, despite calls for action in the face of an intense cash shortage. The bank was widely expected to cut the rate by at least 25 bps. 
 
(WION with inputs from Reuters) 
&nbsp;

RBI governor Urjit Patel has been asked to explain how the decision of demonetisation was taken

A parliamentary committee has asked the governor of India's central bank to appear before it and explain how the decision of demonetisation was taken and for details on how it has impacted the economy, Reuters reported. The Public Accounts Committee (PAC), which is probing the government's decision to scrap high-value Rs 500 and Rs 1000 bank notes (($7.34-$14.69) has asked Reserve Bank of India (RBI) governor, Urjit Patel, to appear before it on January 20, the commmitte's chairman, KV Thomas, also a senior member of the opposition Congress party, told Reuters. The PAC has asked Patel to provide details on the value of currency that has been returned to the bank, the quantity of "black money" it has received and the amount of new currency released so far, Thomas said. The committee has sent the RBI governor a list of questions on the demonetisation process. It has also asked other finance ministry officials, including the revenue secretary and finance secretary to appear before it, Thomas said. In an unexpected move, PM Modi announced the demonetisation of Rs 500 and Rs 1000 notes on November 8 to curb the influence of black money circulating in the economy. The opposition parties have criticised the government and the central bank over shortages of new currency notes and restrictions on depositing old notes that have caused long queues at banks and ATMs. Thomas added that the governor has also been asked about the country's preparedness to handle cashless transactions. "We had decided to call the RBI governor sometime in December but because the prime minister had asked for 50 days, we decided to postpone it to sometime January," Thomas told Reuters. "We did not want to give it a political colour." Urijit Patel is already set to testify before another parliamentary committee on the demonetisation issue. Last month, the RBI unexpectedly kept its key policy rate unchanged at 6.25 per cent, despite calls for action in the face of an intense cash shortage. The bank was widely expected to cut the rate by at least 25 bps. (WION with inputs from Reuters)

Parliamentary committee to question governor of India's central bank over demonetisation

To mitigate hardships of poor and marginal farmers due to cash deficit following demonetisation, the Reserve Bank of India (RBI) today directed banks to distribute at least 40 per cent of currency notes in rural areas.

The 50-day exercise ended on December 30, but the cash supply situation is yet to ease in certain pockets. As a result, the government has not lifted the withdrawal ceiling of Rs 24,000 per week.

On observing that bank notes being supplied to rural areas is not commensurate with the local requirements, some steps have already been initiated, RBI said in a notification.

With a view to ensuring at least 40 per cent bank notes are supplied to rural areas and mitigating the issue in a more enduring manner, the banks maintaining currency chests are advised various steps, including liberal issuance of the existing stock of other denomination notes below Rs 100.

&quot;Banks should advise their currency chests to step up issuance of fresh notes to rural branches of regional rural banks (RRBs), district central cooperative banks (DCCBs) and commercial banks, white label ATMs and post offices in rural areas on a priority basis which are considered as main rural channels of distribution,&quot; it said.

The directive came just a couple of days after Prime Minister Narendra Modi in his address to the nation on the eve of new year exhorted banks to make efforts to restore normalcy as fast as possible and should focus on rural areas.

&quot;I have asked all officers concerned in the government to focus their attention on this task. They have especially been told to proactively resolve the problems in rural and remote areas,&quot; Modi had said.

According to the statement, banks should follow need-based approach for supply of currency as rural requirements could vary from district to district, depending on variations in the rural and urban mix of each district.

Each district has different proportion of current account and&nbsp;savings account in their banks.

RBI has already mapped each district of every state and also made estimates of the requirement.

Accordingly, all chests operating in a district must issue bank notes to distribution channels in the indicated proportion, it said.

&quot;The indicated proportion may be maintained on a weekly average basis at each chest level as it may be difficult to stick to the proportion on daily basis,&quot; it added.&nbsp;

Chests should issue bank notes in denominations of Rs 500 and below, the RBI notification said.

Particular ATMs, including those run by white label ATM operators, may be issued Rs 500 and Rs 100 notes and in the ATM category, off-site ones should be allocated a higher proportion of cash as against on-site as they are more important in last-mile currency connectivity, it added.

About reporting, it said currency chests must furnish daily issuance to their Link Offices (LOs) along with chest slips with a weekly summary at the close of business every Friday.

&quot;Banks should indent for coins, obtain supply from Issue Department of RBI, if required, and ensure supply to public on priority basis,&quot; it said.&nbsp;

(PTI)

The Reserve Bank of India also asked banks to issue more currency denomination notes below Rs 100

To mitigate hardships of poor and marginal farmers due to cash deficit following demonetisation, the Reserve Bank of India (RBI) today directed banks to distribute at least 40 per cent of currency notes in rural areas. The 50-day exercise ended on December 30, but the cash supply situation is yet to ease in certain pockets. As a result, the government has not lifted the withdrawal ceiling of Rs 24,000 per week. On observing that bank notes being supplied to rural areas is not commensurate with the local requirements, some steps have already been initiated, RBI said in a notification. With a view to ensuring at least 40 per cent bank notes are supplied to rural areas and mitigating the issue in a more enduring manner, the banks maintaining currency chests are advised various steps, including liberal issuance of the existing stock of other denomination notes below Rs 100. "Banks should advise their currency chests to step up issuance of fresh notes to rural branches of regional rural banks (RRBs), district central cooperative banks (DCCBs) and commercial banks, white label ATMs and post offices in rural areas on a priority basis which are considered as main rural channels of distribution," it said. The directive came just a couple of days after Prime Minister Narendra Modi in his address to the nation on the eve of new year exhorted banks to make efforts to restore normalcy as fast as possible and should focus on rural areas. "I have asked all officers concerned in the government to focus their attention on this task. They have especially been told to proactively resolve the problems in rural and remote areas," Modi had said. According to the statement, banks should follow need-based approach for supply of currency as rural requirements could vary from district to district, depending on variations in the rural and urban mix of each district. Each district has different proportion of current account and savings account in their banks. RBI has already mapped each district of every state and also made estimates of the requirement. Accordingly, all chests operating in a district must issue bank notes to distribution channels in the indicated proportion, it said. "The indicated proportion may be maintained on a weekly average basis at each chest level as it may be difficult to stick to the proportion on daily basis," it added. Chests should issue bank notes in denominations of Rs 500 and below, the RBI notification said. Particular ATMs, including those run by white label ATM operators, may be issued Rs 500 and Rs 100 notes and in the ATM category, off-site ones should be allocated a higher proportion of cash as against on-site as they are more important in last-mile currency connectivity, it added. About reporting, it said currency chests must furnish daily issuance to their Link Offices (LOs) along with chest slips with a weekly summary at the close of business every Friday. "Banks should indent for coins, obtain supply from Issue Department of RBI, if required, and ensure supply to public on priority basis," it said. (PTI)

Demonetisation: India's central bank directs banks to supply at least 40% of notes to rural areas

India&#39;s central bank refused to&nbsp;divulge whether the views of the chief economic advisor and finance minister were taken into account before the sudden announcement of demonetisation of high-value currency notes by prime minister Narendra Modi on November 8.

The Reserve Bank of India (RBI), which was responding to a query under the Right to Information Act (RTI), said it could not answer the question since it did not come under the definition of &quot;information&quot; under the transparency law.

The applicant wanted to know whether the &quot;views of Chief Economic Advisor Arvind Subramaniam and Finance Minister Arun Jaitley were taken before announcement was made&quot;.

&quot;Query is in the nature of seeking opinion from Central Public Information Officers (CPIO) which is not defined as information as per Section 2(f) of the RTI Act,&quot; the RBI said in response to an RTI query.

Asked whether the information sought fell under &quot;seeking opinion&quot; from the CPIO, former Chief Information Commissioner A N Tiwari said, &quot;No. It does not. It is a fact sought by an RTI applicant. The CPIO cannot say an opinion has been sought from him.&quot;

&quot;How can it be called seeking an opinion? Whether someone was consulted or not is a matter of record. Had the question been that should views be taken then it would mean taking opinion,&quot; former Information Commissioner Shailesh Gandhi said, expressing surprise at the response of RBI Central Public Information Officer.

The definition of information covers &quot;any material in any form, including records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force&quot;.

The query was also sent to the Prime Minister&#39;s Office and the Finance Ministry but it remained unanswered even after 30 days of filing of the RTI application.

The applicant had also sought to know the designation and the names of officials who were consulted before scraping of old Rs 500 and Rs 1000 currency notes.

&quot;The information sought relates to sensitive matters pertaining to discontinuation/withdrawal of bank notes. The information is exempt from disclosure under Section 8(1)(a) and (g) of RTI Act,&quot; the RBI said.

The monetary policy regulator also did not disclose if the decision to demonetise currency notes worth Rs 20 lakh crore was opposed by any official or minister, saying the information sought is &quot;hypothetical&quot; in nature.

It also cited Section 8(1)(a) of the RTI Act to deny minutes of deliberations related to demonetisation.

Section 8(1)(a) of the RTI Act exempts from disclosure the information which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign state or lead to incitement of an offence.

Information sought under Section 8(1)(g) would endanger the life or physical safety of any person or identify the source of information or assistance given in confidence for law enforcement or security purposes.

The RBI has been denying information related to crucial aspects related to demonetisation citing exemption clauses. It recently refused to give reasons behind the demonetisation move.

Earlier, it had denied to Mumbai-based RTI Activist Anil Galgali information about distribution of currency to banks between November 9 and November 19 citing Section 8(1)(g) of the RTI Act.

The central bank did not give any reason as to how this section would apply in the case of information sought by Galgali.

RTI Activist Venkatesh Nayak, who was also denied deliberations on demonetisation by the RBI, said: &quot;While confidentiality prior to announcing the demonetisation decision is understandable, continued secrecy after its implementation is difficult to understand when people are facing problems due to shortage of cash.&quot;

He said the refusal to disclose the minutes of the board meeting where the decision was taken is &quot;perplexing&quot;. 
 
(PTI)

&nbsp;

&nbsp;

India's central bank said it could not answer the question, since it did not come under the definition of 'information'

India's central bank refused to divulge whether the views of the chief economic advisor and finance minister were taken into account before the sudden announcement of demonetisation of high-value currency notes by prime minister Narendra Modi on November 8. The Reserve Bank of India (RBI), which was responding to a query under the Right to Information Act (RTI), said it could not answer the question since it did not come under the definition of "information" under the transparency law. The applicant wanted to know whether the "views of Chief Economic Advisor Arvind Subramaniam and Finance Minister Arun Jaitley were taken before announcement was made". "Query is in the nature of seeking opinion from Central Public Information Officers (CPIO) which is not defined as information as per Section 2(f) of the RTI Act," the RBI said in response to an RTI query. Asked whether the information sought fell under "seeking opinion" from the CPIO, former Chief Information Commissioner A N Tiwari said, "No. It does not. It is a fact sought by an RTI applicant. The CPIO cannot say an opinion has been sought from him." "How can it be called seeking an opinion? Whether someone was consulted or not is a matter of record. Had the question been that should views be taken then it would mean taking opinion," former Information Commissioner Shailesh Gandhi said, expressing surprise at the response of RBI Central Public Information Officer. The definition of information covers "any material in any form, including records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force". The query was also sent to the Prime Minister's Office and the Finance Ministry but it remained unanswered even after 30 days of filing of the RTI application. The applicant had also sought to know the designation and the names of officials who were consulted before scraping of old Rs 500 and Rs 1000 currency notes. "The information sought relates to sensitive matters pertaining to discontinuation/withdrawal of bank notes. The information is exempt from disclosure under Section 8(1)(a) and (g) of RTI Act," the RBI said. The monetary policy regulator also did not disclose if the decision to demonetise currency notes worth Rs 20 lakh crore was opposed by any official or minister, saying the information sought is "hypothetical" in nature. It also cited Section 8(1)(a) of the RTI Act to deny minutes of deliberations related to demonetisation. Section 8(1)(a) of the RTI Act exempts from disclosure the information which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign state or lead to incitement of an offence. Information sought under Section 8(1)(g) would endanger the life or physical safety of any person or identify the source of information or assistance given in confidence for law enforcement or security purposes. The RBI has been denying information related to crucial aspects related to demonetisation citing exemption clauses. It recently refused to give reasons behind the demonetisation move. Earlier, it had denied to Mumbai-based RTI Activist Anil Galgali information about distribution of currency to banks between November 9 and November 19 citing Section 8(1)(g) of the RTI Act. The central bank did not give any reason as to how this section would apply in the case of information sought by Galgali. RTI Activist Venkatesh Nayak, who was also denied deliberations on demonetisation by the RBI, said: "While confidentiality prior to announcing the demonetisation decision is understandable, continued secrecy after its implementation is difficult to understand when people are facing problems due to shortage of cash." He said the refusal to disclose the minutes of the board meeting where the decision was taken is "perplexing". (PTI)

RBI refuses to say if finance minister was consulted before demonetisation

As the 50-day window to deposit scrapped higher denomination notes in banks ended today, less rush was witnessed at various city banks.

A senior executive with a private sector bank said only few people visited their branch in South Mumbai here today on the last day&nbsp;of depositing old Rs 500 and Rs 1,000 notes as compared to the initial days of demonetisation.

&quot;Situation from last one week is just like any other regular day at the bank,&quot; he said.

&quot;I deposited all my savings in the first two weeks after demonetisation was announced. I wish I would have been more patient and&nbsp;deposited it in the last few days as there is no rush at my nearest bank branch,&quot; Ghatkopar resident Shyamlal Dhulia said.

Meanwhile, queues to withdraw cash also truncated as many ATMs continued to remain shut.

Dhulia said three ATMs in the vicinity of his house have been functioning intermittently in the last one month.

Juhu-based entrepreneur Sunil Sharma said panic among people during the initial days (of demonetisation) had led customers&nbsp;rushing to banks and deposit their money.

&quot;Honest tax payers should have been provided with some arrangement or should have been given preferential treatment to deposit&nbsp;or exchange their cash,&quot; he said.

A grocery shop owner in suburban Andheri said, &quot;Though there is no maddening queues outside ATMs, but cash crunch still persists, specifically for current account holders.&quot;

Nagesh Dubey, a chartered accountant, said the step will prove to be beneficial in the long run and that it was needed for the&nbsp;overhaul the currency management.

&quot;The demonetisation process is going to overhaul the entire currency management and will also bring unaccounted money into the system which will provide a road-map to the government to launch and execute developmental projects. This is going to be beneficial in the long run.&quot;&nbsp; 
 
(PTI)

Queues to withdraw cash also truncated as many ATMs continued to remain shut.

As the 50-day window to deposit scrapped higher denomination notes in banks ended today, less rush was witnessed at various city banks. A senior executive with a private sector bank said only few people visited their branch in South Mumbai here today on the last day of depositing old Rs 500 and Rs 1,000 notes as compared to the initial days of demonetisation. "Situation from last one week is just like any other regular day at the bank," he said. "I deposited all my savings in the first two weeks after demonetisation was announced. I wish I would have been more patient and deposited it in the last few days as there is no rush at my nearest bank branch," Ghatkopar resident Shyamlal Dhulia said. Meanwhile, queues to withdraw cash also truncated as many ATMs continued to remain shut. Dhulia said three ATMs in the vicinity of his house have been functioning intermittently in the last one month. Juhu-based entrepreneur Sunil Sharma said panic among people during the initial days (of demonetisation) had led customers rushing to banks and deposit their money. "Honest tax payers should have been provided with some arrangement or should have been given preferential treatment to deposit or exchange their cash," he said. A grocery shop owner in suburban Andheri said, "Though there is no maddening queues outside ATMs, but cash crunch still persists, specifically for current account holders." Nagesh Dubey, a chartered accountant, said the step will prove to be beneficial in the long run and that it was needed for the overhaul the currency management. "The demonetisation process is going to overhaul the entire currency management and will also bring unaccounted money into the system which will provide a road-map to the government to launch and execute developmental projects. This is going to be beneficial in the long run." (PTI)

Demonetisation: No mad rush in banks on last day of depositing old notes

Why were Rs 1000 and Rs 500 notes demonetised by the government?

Fifty days after the government announced that these notes would cease to be legal tender, Reserve Bank of India feels that the reasons behind the sudden announcement cannot be made public.

The monetary policy regulator also refused to give any details about the time it will take to replenish the currency notes.

&quot;The query is in the nature of seeking future date of an event which is not defined as information as per Section 2(f) of the RTI Act,&quot; RBI said in response to an RTI query.

The Bankers&#39; Bank refused to disclose reasons behind the demonetisation of about Rs 20 lakh crore of currency in the country citing Section 8(1)(a) of the Right to Information Act.

The section states, &quot;Information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence.&quot;

Denying the information sought in the RTI application, the RBI did not give any reasons as to how exemption would apply in the given case as the decision was already taken and there was no way that disclosure of information would have fit in any of the reasons cited in section 8(1)(a) of the RTI Act.

&quot;The clause of public interest would apply where exemption clause applies on the information sought by an applicant. In the present case, the information sought does not attract any exemption clause,&quot; former Central Information Commissioner Shailesh Gandhi told PTI.

He said law is very clear that when a public authority rejects to disclose an information it must give clear reasons as to how the exemption clause would apply in the given case.

Recently, it had refused to allow access to minutes of meetings held to decide on the issue of demonetisation of Rs 1000 and Rs 500 notes announced by Prime Minister Narendra Modi on November 8.

Responding to an RTI application filed by activist Venkatesh Nayak, the Banker&#39;s Bank refused to disclose the minutes of the crucial meetings of Central Board of Directors on the issue of demonetisation citing section 8(1)(a) of the transparency law.

Nayak said he will appeal against the decision, adding, while confidentiality prior to the making of the demonetisation decision is understandable, continued secrecy after the implementation of the decision is difficult to understand when crores of Indians are facing difficulties due to the shortage of cash in the economy.

He said the refusal to disclose the minutes of the board meeting where the decision was taken is perplexing to say the very least.

Former Information Commissioner Shailesh Gandhi also underlined that RBI has created an in-house &quot;disclosure policy&quot; which is against the letter and spirit of the RTI Act.

Gandhi has also filed a complaint before Central Information Commission against RBI for adopting the policy.

(PTI)

The Reserve Bank of India also refused to give any details about the time it will take to replenish the currency notes

Why were Rs 1000 and Rs 500 notes demonetised by the government? Fifty days after the government announced that these notes would cease to be legal tender, Reserve Bank of India feels that the reasons behind the sudden announcement cannot be made public. The monetary policy regulator also refused to give any details about the time it will take to replenish the currency notes. "The query is in the nature of seeking future date of an event which is not defined as information as per Section 2(f) of the RTI Act," RBI said in response to an RTI query. The Bankers' Bank refused to disclose reasons behind the demonetisation of about Rs 20 lakh crore of currency in the country citing Section 8(1)(a) of the Right to Information Act. The section states, "Information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence." Denying the information sought in the RTI application, the RBI did not give any reasons as to how exemption would apply in the given case as the decision was already taken and there was no way that disclosure of information would have fit in any of the reasons cited in section 8(1)(a) of the RTI Act. "The clause of public interest would apply where exemption clause applies on the information sought by an applicant. In the present case, the information sought does not attract any exemption clause," former Central Information Commissioner Shailesh Gandhi told PTI. He said law is very clear that when a public authority rejects to disclose an information it must give clear reasons as to how the exemption clause would apply in the given case. Recently, it had refused to allow access to minutes of meetings held to decide on the issue of demonetisation of Rs 1000 and Rs 500 notes announced by Prime Minister Narendra Modi on November 8. Responding to an RTI application filed by activist Venkatesh Nayak, the Banker's Bank refused to disclose the minutes of the crucial meetings of Central Board of Directors on the issue of demonetisation citing section 8(1)(a) of the transparency law. Nayak said he will appeal against the decision, adding, while confidentiality prior to the making of the demonetisation decision is understandable, continued secrecy after the implementation of the decision is difficult to understand when crores of Indians are facing difficulties due to the shortage of cash in the economy. He said the refusal to disclose the minutes of the board meeting where the decision was taken is perplexing to say the very least. Former Information Commissioner Shailesh Gandhi also underlined that RBI has created an in-house "disclosure policy" which is against the letter and spirit of the RTI Act. Gandhi has also filed a complaint before Central Information Commission against RBI for adopting the policy. (PTI)

Demonetisation: India's central bank doesn't divulge reasons for cash scrap

The soon to be Deputy Governor in the apex bank of India, Viral Acharya, who was picked from a total of 90 applicants, was a former C.V. Starr Professor of Economics at New York University Stern.

The 42 year old professor joined NYU Stern in 2008 and was also a former student of NYU Stern who completed his Ph.D in Finance from NYU Stern itself in 2001.

Acharya also has a Ph.D in Computer Science from New York University and a B Tech in Computer Science and Engineering from IIT Bombay.

Prior to joining NYU Stern, Acharya was a Professor of Finance and Academic Director of the Private Equity Institute at the London Business School, a Research Affiliate of the Center for Economic Policy Research and an Academic Advisor to the Bank of England.

He has published articles in the Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Journal of Business, Rand Journal of Economics, Journal of Financial Intermediation, Journal of Money, Credit and Banking, and Financial Analysts Journal.

Professor Acharya has received numerous awards and recognition for his research.

He received the Best Paper Award in Corporate Finance from the Journal of Financial Economics in 2000, Best Paper Award in Equity Trading at the Western Finance Association Meetings in 2003, Outstanding Referee Award for the Review of Financial Studies in 2003, the inaugural Lawrence G. Goldberg Prize for the Best Ph.D. in Financial Intermediation, Best Paper Award in Asset Pricing from the Journal of Financial Economics in 2005, and an inaugural Rising Star in Finance Award in 2008.

The government said that Acharya will remain governor for a span of three years or until further notice.

The post fell vacant after elevation of Urjit Patel as the Governor of RBI in early September.

Subsequently for this post, the government said that it had received about 90 applications till October 21, the last date for sending applications.

(To read more, please visit <a href="http://www.zeebiz.com/">zeebiz.com</a>)

The soon to be Deputy Governor was picked from a total of 90 applicants

The soon to be Deputy Governor in the apex bank of India, Viral Acharya, who was picked from a total of 90 applicants, was a former C.V. Starr Professor of Economics at New York University Stern. The 42 year old professor joined NYU Stern in 2008 and was also a former student of NYU Stern who completed his Ph.D in Finance from NYU Stern itself in 2001. Acharya also has a Ph.D in Computer Science from New York University and a B Tech in Computer Science and Engineering from IIT Bombay. Prior to joining NYU Stern, Acharya was a Professor of Finance and Academic Director of the Private Equity Institute at the London Business School, a Research Affiliate of the Center for Economic Policy Research and an Academic Advisor to the Bank of England. He has published articles in the Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Journal of Business, Rand Journal of Economics, Journal of Financial Intermediation, Journal of Money, Credit and Banking, and Financial Analysts Journal. Professor Acharya has received numerous awards and recognition for his research. He received the Best Paper Award in Corporate Finance from the Journal of Financial Economics in 2000, Best Paper Award in Equity Trading at the Western Finance Association Meetings in 2003, Outstanding Referee Award for the Review of Financial Studies in 2003, the inaugural Lawrence G. Goldberg Prize for the Best Ph.D. in Financial Intermediation, Best Paper Award in Asset Pricing from the Journal of Financial Economics in 2005, and an inaugural Rising Star in Finance Award in 2008. The government said that Acharya will remain governor for a span of three years or until further notice. The post fell vacant after elevation of Urjit Patel as the Governor of RBI in early September. Subsequently for this post, the government said that it had received about 90 applications till October 21, the last date for sending applications. (To read more, please visit zeebiz.com)

Who is Viral Acharya?

In a fresh crackdown on black money, the government is mulling over an ordinance that will seek to impose fines on people in possession of banned Rs 500 and Rs 1,000 notes beyond December 30.

The maximum number of banned notes one can possess regardless of denomination will be 10.

The transfer of over Rs 10,000 in old notes may even result in a punishment and a minimum fine of Rs 50,000 or five times the amount in question, whichever is higher.

Violations of the rule will carry a criminal liability and municipal magistrates will hear cases on violations, said the NDTV report.

However, there was no official word on the act which is likely to come up before the Cabinet on Wednesday.

The ordinance may extinguish the liability of the government and RBI towards the promise to pay the bearer of these notes their value because of a statutory requirement.

In 1978, a similar ordinance was issued to end the government&#39;s liability after Rs 1,000, Rs 5,000 and Rs 10,000 notes were demonetised by the Janata Party government under Morarji Desai.

The ordinance also includes recommendations of the central board of directors of the RBI.

The period to deposit old notes in banks ends on December 30, after which the banned notes have to be directly deposited in the RBI.

The RBI had earlier this month issued an order stating that an amount exceeding Rs 5000 in demonetised notes cannot be deposited in the banks more than once till December 30.

But later, the order was withdrawn.

To flush out black money from the country, Prime Minister Narendra Modi had banned 500 and 1,000 rupee notes on November 8.

(WION)

Govt is mulling over an ordinance that will seek to impose fines on people in possession of banned notes beyond December 30

In a fresh crackdown on black money, the government is mulling over an ordinance that will seek to impose fines on people in possession of banned Rs 500 and Rs 1,000 notes beyond December 30. The maximum number of banned notes one can possess regardless of denomination will be 10. The transfer of over Rs 10,000 in old notes may even result in a punishment and a minimum fine of Rs 50,000 or five times the amount in question, whichever is higher. Violations of the rule will carry a criminal liability and municipal magistrates will hear cases on violations, said the NDTV report. However, there was no official word on the act which is likely to come up before the Cabinet on Wednesday. The ordinance may extinguish the liability of the government and RBI towards the promise to pay the bearer of these notes their value because of a statutory requirement. In 1978, a similar ordinance was issued to end the government's liability after Rs 1,000, Rs 5,000 and Rs 10,000 notes were demonetised by the Janata Party government under Morarji Desai. The ordinance also includes recommendations of the central board of directors of the RBI. The period to deposit old notes in banks ends on December 30, after which the banned notes have to be directly deposited in the RBI. The RBI had earlier this month issued an order stating that an amount exceeding Rs 5000 in demonetised notes cannot be deposited in the banks more than once till December 30. But later, the order was withdrawn. To flush out black money from the country, Prime Minister Narendra Modi had banned 500 and 1,000 rupee notes on November 8. (WION)

Govt mulls over imposing heavy fine on possession of banned notes above Rs 10,000

Prime Minister Narendra Modi received Rs 45 crore ($6.6 million) from Sahara -- a large business conglomerate in India -- before he became came to power in 2014, according to opposition leader Rahul Gandhi.

At a rally in the western state of Gujarat, the Congress vice-president&nbsp;claimed that during a raid in 2014,&nbsp;taxmen found documents which suggested that Sahara company made multiple payments to Modi between October 2013 and February 2014.

Earlier in the day, Gandhi tweeted that the Modi government is behaving like a &quot;confused&quot; traffic signal exhibiting different colours at the same time. He was attacking the government&#39;s &#39;repeated&#39; changes in the rules regarding deposit of old currency notes in banks.

He posted the picture of a huge traffic signal showing red, yellow, blue and a few other colours at the same time, on Twitter with the caption, &quot;Government orders after demonetisation.&quot;

<div class="ui-state-default" contenteditable="false">
<div class="twitter-block" draggable="false">
<blockquote class="twitter-tweet" data-lang="en">
Government orders after demonetisation: <a href="https://t.co/5D5p0XX4MO">pic.twitter.com/5D5p0XX4MO</a>
&mdash; Office of RG (@OfficeOfRG) <a href="https://twitter.com/OfficeOfRG/status/811452231413207040">December 21, 2016</a></blockquote>
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script></div>
<a class="close-mark close-div" href="#" id="jqclosemark">&times;</a></div>

&nbsp;

<div class="ui-state-default" contenteditable="false">
<div class="row">
<div class="article-blockquote">
<div class="col-sm-10 col-sm-offset-1 blockquote-content quoteshare">
<blockquote>
<h5>Chief Congress spokesman Randeep Surjewala was equally critical of the latest order. He gave the RBI the sobriquet &#39;Reverse Bank of India&#39;</h5>
</blockquote>
</div>

<div class="col-sm-1 blockquote-content">
<div class="share-blockquote"><a class="twitter popup" href="http://twitter.com/intent/tweet?text=Chief Congress spokesman Randeep Surjewala was equally critical of the latest order. He gave the RBI the sobriquet 'Reverse Bank of India'" target="_blank">&nbsp;</a></div>
</div>
<a class="close-mark close-div" href="#" id="jqquoteclosemark">&times;</a></div>
</div>
</div>

The Congress leader had yesterday likened the repeated changes in the rules to Modi&#39;s changing of &quot;clothes&quot; and had said that the message going out was that the Prime Minister&#39;s words were &quot;hollow&quot;.

He was commenting on the new decision of the government under which an amount more than Rs 50,00 in scrapped currency can be deposited only once per account till December 30.

Earlier, the Prime Minister, while announcing the demonetisation decision on November 8, had said old Rs 500 and Rs 1,000 notes could be deposited in banks till December 30 without any questions asked.

Party chief spokesman Randeep Surjewala was equally critical of the latest order, with him giving RBI the sobriquet of &quot;Reverse Bank of India.&quot;

In a series of tweets, he said, &quot;Unfortunately, Reserve Bank of India has become &#39;Reverse Bank of India&#39;!&quot;

Surjewala also posted two cartoons stating &quot;the rules of RBI are like weather, which keeps on changing and therefore, requires hourly bulletins to inform people.&quot;

&quot;Daily &#39;headline management&#39; is the norm for Modi Govt. If Ind. Owner has a choice to pay in cash or cheque, futile to amend the Wages Act,&quot; he said in response to the government bringing an ordinance to amend the Payment of Wage Act for allowing business and industrial establishments to pay salaries through cheques or by using electronic modes.

&quot;2ndly, it reflects massive shortage of currency with Modi Govt. Instead of admitting it, it is forcing daily wage earners to stand in bank queues,&quot; he said.

Surjewala also latched on to the remarks of Andhra Pradesh Chief Minister Chandrababu Naidu, who after supporting demonetisation initially, did a volte face and said the move has created many troubles for the common man.

&quot;AP CM, NDA ally &amp; head of #DeMonetisation Committee is breaking his head over the mess. Do u need more proof Modiji?&quot;, he said.

Ahmed Patel, Political Secretary to Congress president Sonia Gandhi, was equally caustic. &quot;50 days, 60 rules #DeMonetisation,&quot; he said in a tweet.

(PTI)

Gandhi said Modi received Rs 45 crore from a business conglomerate and also attacked the government's haywire demonetisation policy

Prime Minister Narendra Modi received Rs 45 crore ($6.6 million) from Sahara -- a large business conglomerate in India -- before he became came to power in 2014, according to opposition leader Rahul Gandhi. At a rally in the western state of Gujarat, the Congress vice-president claimed that during a raid in 2014, taxmen found documents which suggested that Sahara company made multiple payments to Modi between October 2013 and February 2014. Earlier in the day, Gandhi tweeted that the Modi government is behaving like a "confused" traffic signal exhibiting different colours at the same time. He was attacking the government's 'repeated' changes in the rules regarding deposit of old currency notes in banks. He posted the picture of a huge traffic signal showing red, yellow, blue and a few other colours at the same time, on Twitter with the caption, "Government orders after demonetisation." Government orders after demonetisation: pic.twitter.com/5D5p0XX4MO — Office of RG (@OfficeOfRG) December 21, 2016 × Chief Congress spokesman Randeep Surjewala was equally critical of the latest order. He gave the RBI the sobriquet 'Reverse Bank of India' × The Congress leader had yesterday likened the repeated changes in the rules to Modi's changing of "clothes" and had said that the message going out was that the Prime Minister's words were "hollow". He was commenting on the new decision of the government under which an amount more than Rs 50,00 in scrapped currency can be deposited only once per account till December 30. Earlier, the Prime Minister, while announcing the demonetisation decision on November 8, had said old Rs 500 and Rs 1,000 notes could be deposited in banks till December 30 without any questions asked. Party chief spokesman Randeep Surjewala was equally critical of the latest order, with him giving RBI the sobriquet of "Reverse Bank of India." In a series of tweets, he said, "Unfortunately, Reserve Bank of India has become 'Reverse Bank of India'!" Surjewala also posted two cartoons stating "the rules of RBI are like weather, which keeps on changing and therefore, requires hourly bulletins to inform people." "Daily 'headline management' is the norm for Modi Govt. If Ind. Owner has a choice to pay in cash or cheque, futile to amend the Wages Act," he said in response to the government bringing an ordinance to amend the Payment of Wage Act for allowing business and industrial establishments to pay salaries through cheques or by using electronic modes. "2ndly, it reflects massive shortage of currency with Modi Govt. Instead of admitting it, it is forcing daily wage earners to stand in bank queues," he said. Surjewala also latched on to the remarks of Andhra Pradesh Chief Minister Chandrababu Naidu, who after supporting demonetisation initially, did a volte face and said the move has created many troubles for the common man. "AP CM, NDA ally & head of #DeMonetisation Committee is breaking his head over the mess. Do u need more proof Modiji?", he said. Ahmed Patel, Political Secretary to Congress president Sonia Gandhi, was equally caustic. "50 days, 60 rules #DeMonetisation," he said in a tweet. (PTI)

Demonetisation: Opposition leader Rahul Gandhi accuses PM Modi of graft

The Reserve Bank of India&nbsp;has modified&nbsp;old currency deposit rules once again,&nbsp;Know-Your-Customer (KYC) compliant account holders can now deposit over Rs 5,000 without any questions asked.

RBI had said on Monday old notes exceeding Rs 5,000 can be deposited only once per account till December 30. It said that the depositor will also have to give an explanation as to why the old notes were not deposited earlier, according to PTI.&nbsp;

RBI added that the explanation should be kept on record to facilitate an audit trail at a later stage.&nbsp;

Further, RBI said that even if deposits are below Rs 5,000, if the cumulative deposit exceeds Rs 5,000, &quot;they may be subject to the procedure to be followed in case of tenders above Rs 5,000&quot;.&nbsp;

RBI also said that deposits above Rs 5,000 can be credited only into KYC-compliant accounts and &quot;if the accounts are not KYC compliant credits may be restricted up to Rs 50,000 subject to the conditions governing the conduct of such accounts&quot;, PTI reports.

However, RBI has said that the restrictions shall not apply to deposits under the Pradhan Mantri Garib Kalyan scheme, 2016.

&quot;It has been decided to place certain restrictions on deposits of specified bank notes into bank accounts while encouraging the deposits of the same under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016,&quot; RBI said in a notification.

Under the scheme, black money holders can deposit unaccounted cash in an account which will be subject to 50 per cent tax, which breaks down into 30 per cent&nbsp;tax, 33 per cent&nbsp;surcharge and 10 per cent&nbsp;penalty, and 4-year interest-free lock-in for the remaining 25 per cent of the amount.

(WION with inputs from PTI)

&nbsp;

Know-Your-Customer (KYC) compliant account holders can now deposit over Rs 5000 without any questions asked

The Reserve Bank of India has modified old currency deposit rules once again, Know-Your-Customer (KYC) compliant account holders can now deposit over Rs 5,000 without any questions asked. RBI had said on Monday old notes exceeding Rs 5,000 can be deposited only once per account till December 30. It said that the depositor will also have to give an explanation as to why the old notes were not deposited earlier, according to PTI. RBI added that the explanation should be kept on record to facilitate an audit trail at a later stage. Further, RBI said that even if deposits are below Rs 5,000, if the cumulative deposit exceeds Rs 5,000, "they may be subject to the procedure to be followed in case of tenders above Rs 5,000". RBI also said that deposits above Rs 5,000 can be credited only into KYC-compliant accounts and "if the accounts are not KYC compliant credits may be restricted up to Rs 50,000 subject to the conditions governing the conduct of such accounts", PTI reports. However, RBI has said that the restrictions shall not apply to deposits under the Pradhan Mantri Garib Kalyan scheme, 2016. "It has been decided to place certain restrictions on deposits of specified bank notes into bank accounts while encouraging the deposits of the same under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016," RBI said in a notification. Under the scheme, black money holders can deposit unaccounted cash in an account which will be subject to 50 per cent tax, which breaks down into 30 per cent tax, 33 per cent surcharge and 10 per cent penalty, and 4-year interest-free lock-in for the remaining 25 per cent of the amount. (WION with inputs from PTI)

Demonetisation: Reserve Bank of India changes old currency deposit rules for 60th time

The Reserve Bank of India has imposed restrictions on the amount of scrapped 500 and 1,000 rupee notes that can be deposited in bank accounts, news agency Press Trust of India reports.

RBI said on Monday old notes exceeding Rs 5,000 can be deposited only once per account till December 30. It said that the depositor will also have to give an explanation as to why the old notes were not deposited earlier, according to PTI.&nbsp;

RBI added that the explanation should be kept on record to facilitate an audit trail at a later stage.&nbsp;

Further, RBI said that even if deposits are below Rs 5,000, if the cumulative deposit exceeds Rs 5000, &quot;they may be subject to the procedure to be followed in case of tenders above Rs 5000&quot;.&nbsp;

RBI also said that deposits above Rs 5,000 can be credited only into KYC-compliant accounts and &quot;if the accounts are not KYC compliant credits may be restricted up to Rs 50,000 subject to the conditions governing the conduct of such accounts&quot;, PTI reports.

However, RBI has said that the restrictions shall not apply to deposits under the Pradhan Mantri Garib Kalyan scheme, 2016.

&quot;It has been decided to place certain restrictions on deposits of specified bank notes into bank accounts while encouraging the deposits of the same under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016,&quot; RBI said in a notification.

Under the scheme, black money holders can deposit unaccounted cash in an account which will be subject to 50 per cent tax, which breaks down into 30% tax, 33% surcharge and 10% penalty, and 4-year interest-free lock-in for the remaining 25 per cent of the amount.

(WION with inputs from PTI)

The RBI said people will also have to explain why the demonetised 500- and 1,000-rupee notes have not been deposited so far

The Reserve Bank of India has imposed restrictions on the amount of scrapped 500 and 1,000 rupee notes that can be deposited in bank accounts, news agency Press Trust of India reports. RBI said on Monday old notes exceeding Rs 5,000 can be deposited only once per account till December 30. It said that the depositor will also have to give an explanation as to why the old notes were not deposited earlier, according to PTI. RBI added that the explanation should be kept on record to facilitate an audit trail at a later stage. Further, RBI said that even if deposits are below Rs 5,000, if the cumulative deposit exceeds Rs 5000, "they may be subject to the procedure to be followed in case of tenders above Rs 5000". RBI also said that deposits above Rs 5,000 can be credited only into KYC-compliant accounts and "if the accounts are not KYC compliant credits may be restricted up to Rs 50,000 subject to the conditions governing the conduct of such accounts", PTI reports. However, RBI has said that the restrictions shall not apply to deposits under the Pradhan Mantri Garib Kalyan scheme, 2016. "It has been decided to place certain restrictions on deposits of specified bank notes into bank accounts while encouraging the deposits of the same under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016," RBI said in a notification. Under the scheme, black money holders can deposit unaccounted cash in an account which will be subject to 50 per cent tax, which breaks down into 30% tax, 33% surcharge and 10% penalty, and 4-year interest-free lock-in for the remaining 25 per cent of the amount. (WION with inputs from PTI)

Demonetisation: Old notes worth more than Rs 5,000 can now be deposited only once till Dec 30

Finance Ministry on Wednesday exuded confidence that the supply of new currency notes would considerably improve in next 2-3 weeks even as it asked the RBI and banks to &quot;countercheck&quot; the data regarding the deposit of now-defunct currency notes to ensure there is no double counting.

The RBI has already pumped in Rs 5 lakh crore worth 500 and 2,000 rupee notes and by the month end about 50 per cent of the Rs 15 lakh crore worth demonetised currency would be injected into the system, economic affairs secretary Shaktikanta Das told reporters here.

&quot;Finance Ministry, RBI and enforcement agencies are working in tandem so that situation eases out.&nbsp;Situation has considerably improved. And going forward, I would expect in next 2-3 weeks situation&nbsp;will considerably ease out with the supply of more new 500 rupee notes,&quot; he said, adding that&nbsp;condition would not &quot;worsen&quot; after December 30.

He said the government has stepped up printing of 500 rupee notes and as its circulation increases,&nbsp;people would also take out the 2,000 rupee notes they were hoarding so far.

More than 2 lakh ATMs have already been recalibrated against 2.20 lakh ATMs and it has come to the&nbsp;ministry&#39;s notice that some banks in order to ensure that they are in a position to service their&nbsp;own customers, prefer to give cash through their branches.

&quot;We have advised banks that they should continue to replenish cash in ATMs and not to starve ATMs. We are&nbsp;monitoring it regularly,&quot; Das said.

As per RBI data, over Rs 12.44 lakh crore worth defunct 500 and 1000 rupee notes have been deposited&nbsp;till December 10.

&quot;RBI has given a figure of Rs 12.5 lakh crore which has been received back. There are lot of areas&nbsp;where we feel there could be double counting. So we have identified those areas and we have&nbsp;requested RBI and banks to again double check.

&quot;So a process of correction, checking, counter checking of the figure, due diligence is being done&nbsp;to see there is no double counting of figure.... We think there is scope for double counting and&nbsp;therefore the scope for verification of those figures are going on,&quot; Das said.

He said three times the total number of lower denomination notes -- 100, 50, 20 and 10 -- which RBI&nbsp;supplies in a year has been supplied over the last five weeks.

About Rs 1.60 lakh crore worth 100 rupee notes were in circulation before November 8 and more than&nbsp;Rs 80,000 crore worth of this notes have been supplied to the market over past five weeks.&nbsp;

The DEA Secretary further said that more number of 50, 20 and 10 rupee notes has also been&nbsp;circulated in the system.

&quot;Roughly about almost 50 per cent of the notes which were in circulation would be supplied in the&nbsp;next 10-15 days,&quot; Das said, adding that seized notes are being put back to circulation as soon as&nbsp;possible.

Prime Minister Narendra Modi had on November 8 announced scrapping of old Rs 500 and Rs 1,000 notes,&nbsp;and replaced by new Rs 2,000 and Rs 500 notes. The demonetised notes accounted for 86 per cent of currency in circulation or Rs 15.4 lakh crore.

&quot;More and more production lines have been diverted in printing 500 rupee notes because we have&nbsp;enough number of 2000 rupee notes that have been supplied and there is enough stock available. But&nbsp;now the printing of the 500 rupee notes have been significantly stepped up.

&quot;It has been pushed into the market so that the supply of 2000 rupee notes becomes more mobile. So&nbsp;with increased supply of 500 rupee notes, the 2000 rupee notes which people were hoarding till now&nbsp;will come back to the system,&quot; Das said, adding notes are being airlifted to areas facing shortage. 
 
He further said that the security features and design of the new notes were indigenously developed&nbsp;and hence the possibility of counterfeiting it is far far lower.

Das also promised to sort out issues faced by Nepal and Bhutan due to non-availability of 500 and&nbsp;2,000 rupee notes.

&quot;As far as Nepal is concerned we have already examined the report, so we will be taking some action,&nbsp;whatever action govt will take is under examination.

As far as Bhutan is concerned, the RBI has made necessary arrangements for supply of cash required&nbsp;by Bhutan authorities because Indian rupee is accepted in Bhutan. So the RBI has given necessary&nbsp;instructions to connected banks to give necessary cash required by Royal Monetary Authority of&nbsp;Bhutan,&quot; he said.

Das said the RBI has a particular plan of action with regard to currency supply. &quot;With regard to&nbsp;remonetisation process, it would be as per requirement and also government has given a big push to&nbsp;digital transaction. There is very significant growth of digital transaction and therefore the&nbsp;requirement of cash will be measured and based on requirement the cash will be remonetised.&quot;

He said the CBDT is taking &quot;surgical action&quot; on data provided by the Financial Intelligence Unit&nbsp;(FIU) and the Suspicious Transaction Reports (STRs) filed by banks for detecting illegal&nbsp;accumulation of new currency.

&quot;Further action is being taken by the tax department and it is not an aimless fishing expedition,&quot;&nbsp;Das said.

With regard to the impact of demonetisation on the sowing of the Rabi crop in winter, Das said the total sowing area so far was almost at par with last year and whatever shortfall had happened would be made good in the coming weeks.

(PTI)

More than 2 lakh ATMs have been recalibrated, 2.2 lakh to go

Finance Ministry on Wednesday exuded confidence that the supply of new currency notes would considerably improve in next 2-3 weeks even as it asked the RBI and banks to "countercheck" the data regarding the deposit of now-defunct currency notes to ensure there is no double counting. The RBI has already pumped in Rs 5 lakh crore worth 500 and 2,000 rupee notes and by the month end about 50 per cent of the Rs 15 lakh crore worth demonetised currency would be injected into the system, economic affairs secretary Shaktikanta Das told reporters here. "Finance Ministry, RBI and enforcement agencies are working in tandem so that situation eases out. Situation has considerably improved. And going forward, I would expect in next 2-3 weeks situation will considerably ease out with the supply of more new 500 rupee notes," he said, adding that condition would not "worsen" after December 30. He said the government has stepped up printing of 500 rupee notes and as its circulation increases, people would also take out the 2,000 rupee notes they were hoarding so far. More than 2 lakh ATMs have already been recalibrated against 2.20 lakh ATMs and it has come to the ministry's notice that some banks in order to ensure that they are in a position to service their own customers, prefer to give cash through their branches. "We have advised banks that they should continue to replenish cash in ATMs and not to starve ATMs. We are monitoring it regularly," Das said. As per RBI data, over Rs 12.44 lakh crore worth defunct 500 and 1000 rupee notes have been deposited till December 10. "RBI has given a figure of Rs 12.5 lakh crore which has been received back. There are lot of areas where we feel there could be double counting. So we have identified those areas and we have requested RBI and banks to again double check. "So a process of correction, checking, counter checking of the figure, due diligence is being done to see there is no double counting of figure.... We think there is scope for double counting and therefore the scope for verification of those figures are going on," Das said. He said three times the total number of lower denomination notes -- 100, 50, 20 and 10 -- which RBI supplies in a year has been supplied over the last five weeks. About Rs 1.60 lakh crore worth 100 rupee notes were in circulation before November 8 and more than Rs 80,000 crore worth of this notes have been supplied to the market over past five weeks. The DEA Secretary further said that more number of 50, 20 and 10 rupee notes has also been circulated in the system. "Roughly about almost 50 per cent of the notes which were in circulation would be supplied in the next 10-15 days," Das said, adding that seized notes are being put back to circulation as soon as possible. Prime Minister Narendra Modi had on November 8 announced scrapping of old Rs 500 and Rs 1,000 notes, and replaced by new Rs 2,000 and Rs 500 notes. The demonetised notes accounted for 86 per cent of currency in circulation or Rs 15.4 lakh crore. "More and more production lines have been diverted in printing 500 rupee notes because we have enough number of 2000 rupee notes that have been supplied and there is enough stock available. But now the printing of the 500 rupee notes have been significantly stepped up. "It has been pushed into the market so that the supply of 2000 rupee notes becomes more mobile. So with increased supply of 500 rupee notes, the 2000 rupee notes which people were hoarding till now will come back to the system," Das said, adding notes are being airlifted to areas facing shortage. He further said that the security features and design of the new notes were indigenously developed and hence the possibility of counterfeiting it is far far lower. Das also promised to sort out issues faced by Nepal and Bhutan due to non-availability of 500 and 2,000 rupee notes. "As far as Nepal is concerned we have already examined the report, so we will be taking some action, whatever action govt will take is under examination. As far as Bhutan is concerned, the RBI has made necessary arrangements for supply of cash required by Bhutan authorities because Indian rupee is accepted in Bhutan. So the RBI has given necessary instructions to connected banks to give necessary cash required by Royal Monetary Authority of Bhutan," he said. Das said the RBI has a particular plan of action with regard to currency supply. "With regard to remonetisation process, it would be as per requirement and also government has given a big push to digital transaction. There is very significant growth of digital transaction and therefore the requirement of cash will be measured and based on requirement the cash will be remonetised." He said the CBDT is taking "surgical action" on data provided by the Financial Intelligence Unit (FIU) and the Suspicious Transaction Reports (STRs) filed by banks for detecting illegal accumulation of new currency. "Further action is being taken by the tax department and it is not an aimless fishing expedition," Das said. With regard to the impact of demonetisation on the sowing of the Rabi crop in winter, Das said the total sowing area so far was almost at par with last year and whatever shortfall had happened would be made good in the coming weeks. (PTI)

Demonetisation: Significant number of Rs 500 notes being printed, says Indian government

Reserve Bank of India (RBI) governor Urjit Patel, who was in Kolkata today for a central board meeting following demonetisation, was shown black flags by Trinamool Congress (TMC) supporters outside the regional RBI office in the city.

Protestors holding black flags and shouting slogans&nbsp;&lsquo;Go back Urjit&rsquo; staged a demonstration outside the RBI office. A&nbsp;rally led by senior Trinamool Congress leaders reached the office and registered their protest against demonetisation.

Earlier in the day, the Left-wing party too had held a demonstration outside the RBI office.

Patel met senior officials of RBI to take stock of the situation post demonetisation in the eastern and north-eastern states.

Patel did not interact with the media.&nbsp;He is likely to meet West Bengal Chief Minister&nbsp;Mamata Banerjee late afternoon and discuss issues faced by banks in the state.

(WION)

Governor Urijit Patel was in Kolkata for a central board meeting

Reserve Bank of India (RBI) governor Urjit Patel, who was in Kolkata today for a central board meeting following demonetisation, was shown black flags by Trinamool Congress (TMC) supporters outside the regional RBI office in the city. Protestors holding black flags and shouting slogans ‘Go back Urjit’ staged a demonstration outside the RBI office. A rally led by senior Trinamool Congress leaders reached the office and registered their protest against demonetisation. Earlier in the day, the Left-wing party too had held a demonstration outside the RBI office. Patel met senior officials of RBI to take stock of the situation post demonetisation in the eastern and north-eastern states. Patel did not interact with the media. He is likely to meet West Bengal Chief Minister Mamata Banerjee late afternoon and discuss issues faced by banks in the state. (WION)

Demonetisation: Reserve Bank of India governor shown black flags in Kolkata

Tightening the noose around people who misused banking channels to park unaccounted money, the Reserve Bank today imposed certain restrictions on withdrawal if more than Rs 2 lakh has been deposited after November 9 in an account which has a balance of over Rs 5 lakh.

As per a RBI notification, withdrawal or transfer of funds will not be permitted in accounts without quoting of PAN or submission of Form 60 (persons who do not have PAN).

The Reserve Bank also said monthly withdrawal limit of Rs 10,000 will be maintained even if a &#39;small account&#39; has witnessed increase in annual permissible deposit of Rs 1 lakh.

The notification follows after it was brought to the notice of the RBI that &quot;strict compliance&quot; with KYC (Know Your Customer) provisions is not being ensured in some cases.

In respect of KYC compliant accounts where the required Customer Due Diligence (CDD) procedure has been complied with, RBI said banks and NBFCs should ensure compliance regarding quoting of PAN/obtaining of Form 60 for all transactions.

&quot;No debit transaction, transfer or otherwise shall be allowed in accounts which do not comply with the above mentioned requirements.

&quot;To begin with, this rule shall be strictly applied in accounts where both the thresholds listed -- (i) balance of rupees five lakh or more; and (ii) the total deposits (including credits by electronic or other means) made after November 9, 2016, exceed rupees two lakh,&quot; RBI said.

RBI further said if any account is rendered ineligible for being classified as a small account due to credits/balance in the account exceeding the permissible limits, withdrawals may be allowed within the limit prescribed for small accounts.

The monthly limit for withdrawal and transfer from a small account is Rs 10,000. Also, aggregate of all credits in a financial year cannot exceed Rs 1 lakh.

Basic Savings Bank Deposit Accounts (Jan Dhan accounts are akin to BSBDAs), which are not KYC compliant accounts are to be treated as &#39;small accounts&#39;, the RBI added.

Government demonetised old Rs 500/1000 from November 9.

Earlier, RBI had asked banks to strictly follow norms while allowing deposits in dormant accounts. 
There have been reports some people misused Jan Dhan and dormant accounts to deposit unaccounted money following demonetisation.&nbsp;

(PTI)

RBI imposed withdrawal restrictions if more than Rs 2 lakh has been deposited after November 9 in an account with balance of over Rs 5 lakh

Tightening the noose around people who misused banking channels to park unaccounted money, the Reserve Bank today imposed certain restrictions on withdrawal if more than Rs 2 lakh has been deposited after November 9 in an account which has a balance of over Rs 5 lakh. As per a RBI notification, withdrawal or transfer of funds will not be permitted in accounts without quoting of PAN or submission of Form 60 (persons who do not have PAN). The Reserve Bank also said monthly withdrawal limit of Rs 10,000 will be maintained even if a 'small account' has witnessed increase in annual permissible deposit of Rs 1 lakh. The notification follows after it was brought to the notice of the RBI that "strict compliance" with KYC (Know Your Customer) provisions is not being ensured in some cases. In respect of KYC compliant accounts where the required Customer Due Diligence (CDD) procedure has been complied with, RBI said banks and NBFCs should ensure compliance regarding quoting of PAN/obtaining of Form 60 for all transactions. "No debit transaction, transfer or otherwise shall be allowed in accounts which do not comply with the above mentioned requirements. "To begin with, this rule shall be strictly applied in accounts where both the thresholds listed -- (i) balance of rupees five lakh or more; and (ii) the total deposits (including credits by electronic or other means) made after November 9, 2016, exceed rupees two lakh," RBI said. RBI further said if any account is rendered ineligible for being classified as a small account due to credits/balance in the account exceeding the permissible limits, withdrawals may be allowed within the limit prescribed for small accounts. The monthly limit for withdrawal and transfer from a small account is Rs 10,000. Also, aggregate of all credits in a financial year cannot exceed Rs 1 lakh. Basic Savings Bank Deposit Accounts (Jan Dhan accounts are akin to BSBDAs), which are not KYC compliant accounts are to be treated as 'small accounts', the RBI added. Government demonetised old Rs 500/1000 from November 9. Earlier, RBI had asked banks to strictly follow norms while allowing deposits in dormant accounts. There have been reports some people misused Jan Dhan and dormant accounts to deposit unaccounted money following demonetisation. (PTI)

Demonetisation: RBI imposes restrictions on withdrawal from certain bank accounts

India&#39;s surprise move to abolish high-value rupee notes has undermined the central bank&#39;s reputation for competence and independence, even as it remains a credible institution, Standard &amp; Poor`s director Kyran Curry said on Wednesday.

The comments come as the Reserve Bank of India (RBI) and the government face criticism for their implementation of the demonetisation initative in November, abolishing 500 and 1,000 rupee notes ($7.41-$14.82), which accounted for 86 per cent of the currency in circulation. 
&nbsp; 
The slow replacement of the abolished bills has sparked a shortage of cash that has hit large parts of the economy, and the RBI and government have had to subsequently announce a series of ad hoc measures to ease the impact of the measure. 
&nbsp; 
At the same time some policy makers, including former prime minister Manmohan Singh, now part of the opposition, has also questioned the RBI&#39;s independence for agreeing to implement the action without much preparation.&nbsp;

Curry, in a teleconference with media, said demonetisation had undermined confidence in the predictability and effectiveness of policymaking in India, including of the RBI.

&quot;Demonetisation has cast a shadow over the RBI&#39;s competence and independence,&quot; Curry said.

However, he also noted that &quot;we still think this institution is a very credible one, and in terms of the conduct of monetary policy, it&#39;s a very mature institution.&quot;

The RBI under Governor Urjit Patel has also been criticised recently after surprising investors by keeping interest rates on hold last week, the second time in a row it has wrong-footed investors with its monetary policy decision. 
&nbsp; 
(Reuters)

It remains a credible institution, said Kyran Curry

India's surprise move to abolish high-value rupee notes has undermined the central bank's reputation for competence and independence, even as it remains a credible institution, Standard & Poor`s director Kyran Curry said on Wednesday. The comments come as the Reserve Bank of India (RBI) and the government face criticism for their implementation of the demonetisation initative in November, abolishing 500 and 1,000 rupee notes ($7.41-$14.82), which accounted for 86 per cent of the currency in circulation. The slow replacement of the abolished bills has sparked a shortage of cash that has hit large parts of the economy, and the RBI and government have had to subsequently announce a series of ad hoc measures to ease the impact of the measure. At the same time some policy makers, including former prime minister Manmohan Singh, now part of the opposition, has also questioned the RBI's independence for agreeing to implement the action without much preparation. Curry, in a teleconference with media, said demonetisation had undermined confidence in the predictability and effectiveness of policymaking in India, including of the RBI. "Demonetisation has cast a shadow over the RBI's competence and independence," Curry said. However, he also noted that "we still think this institution is a very credible one, and in terms of the conduct of monetary policy, it's a very mature institution." The RBI under Governor Urjit Patel has also been criticised recently after surprising investors by keeping interest rates on hold last week, the second time in a row it has wrong-footed investors with its monetary policy decision. (Reuters)

Demonetisation undermined RBI reputation: S&P director

Indian banks have so far taken back a total of 12.44 trillion rupees ($184.24 billion) in old 500- and 1,000-rupee notes that the government did away with last month, Reserve Bank of India Deputy Governor R Gandhi said Tuesday.&nbsp;

The figure represents 80 per cent of the 15.44 trillion rupees in old notes that were in circulation before Prime Minister Narendra Modi them on November 8&nbsp;in a bid to target &quot;black money&quot;.

Analysts had earlier said that only about 13 trillion of the abolished notes would be deposited in banks as people with black money would be wary of coming under the scanner of tax authorities.&nbsp;

People can turn in their old notes till December 31.

Reuters reported that Economists have said the total deposits can be between 13 trillion to 13,5 trillion rupees by the deadline.&nbsp;

&quot;The old notes of 500 and 1000 rupees which have been returned back to the Reserve Bank and the currency chest amounted to 12.44 trillion rupees as of Dec. 10, 2016,&quot; Gandhi said in a news briefing.&nbsp;

Gandhi added that the RBI has printed some 1.7 billion new 500- and 2,000-rupee notes, to replace the abolished notes.The figure is a fraction of the 24 billion individual notes that were withdrawn.&nbsp;

 
(WION with inputs from Reuters)

 
&nbsp;

The RBI has printed some 1.7 billion new 500- and 2,000-rupee notes, a fraction of the 24 billion individual notes that were withdrawn

Indian banks have so far taken back a total of 12.44 trillion rupees ($184.24 billion) in old 500- and 1,000-rupee notes that the government did away with last month, Reserve Bank of India Deputy Governor R Gandhi said Tuesday. The figure represents 80 per cent of the 15.44 trillion rupees in old notes that were in circulation before Prime Minister Narendra Modi them on November 8 in a bid to target "black money". Analysts had earlier said that only about 13 trillion of the abolished notes would be deposited in banks as people with black money would be wary of coming under the scanner of tax authorities. People can turn in their old notes till December 31. Reuters reported that Economists have said the total deposits can be between 13 trillion to 13,5 trillion rupees by the deadline. "The old notes of 500 and 1000 rupees which have been returned back to the Reserve Bank and the currency chest amounted to 12.44 trillion rupees as of Dec. 10, 2016," Gandhi said in a news briefing. Gandhi added that the RBI has printed some 1.7 billion new 500- and 2,000-rupee notes, to replace the abolished notes.The figure is a fraction of the 24 billion individual notes that were withdrawn. (WION with inputs from Reuters)

Demonetisation: RBI says $184 billion, 80% of old notes, back in banks

The Indian government today informed Parliament that a decision has been taken to print plastic currency notes and procurement of material has started.

&quot;It has been decided to print banknotes based on plastic or polymer substrate. The process of procurement has been initiated,&quot; minister of state for finance Arjun Ram Meghwal said. He was responding to a query in the Lower House, Lok Sabha whether the central bank, RBI, proposed to print plastic currency notes in place of paper ones.

The RBI for long has been planning to launch plastic currency note after field trials.

In February 2014, the government had informed Parliament that one billion plastic notes of Rs 10 denomination would be introduced in a field trial in five cities selected for their geographical and climatic diversity. The selected cities were Kochi, Mysore, Jaipur, Shimla and Bhubaneswar.

Plastic notes have an average life span of about five years and are difficult to imitate. Also, currency notes made of plastic are cleaner than paper ones. They were first introduced in Australia to safeguard against counterfeiting.

Replying to another question, Meghwal said it was informed by RBI in December 2015 that they have received some banknotes of Rs 1,000 without having security thread which were printed at Currency Note Press (CNP), Nashik, on paper supplied by Security Paper Mill (SPM), Hoshangabad.

An enquiry has been initiated by Security Printing and Minting Corporation (SPMCIL) and the units involved (SPM and CNP).

&quot;Major penalty chargesheet has been issued to the personnel concerned. Disciplinary proceedings have been initiated as per departmental rules,&quot; the minister said.

Meghwal further said action has been taken to strengthen quality procedure and online inspection system in manufacturing process and special training has been given to the persons concerned to avoid such types of mistakes in future.

&quot;Additional inspections have been introduced to ensure defect-free production,&quot; he said.&nbsp;

(PTI) 
&nbsp;

Plastic notes were first introduced in Australia to safeguard against counterfeiting

The Indian government today informed Parliament that a decision has been taken to print plastic currency notes and procurement of material has started. "It has been decided to print banknotes based on plastic or polymer substrate. The process of procurement has been initiated," minister of state for finance Arjun Ram Meghwal said. He was responding to a query in the Lower House, Lok Sabha whether the central bank, RBI, proposed to print plastic currency notes in place of paper ones. The RBI for long has been planning to launch plastic currency note after field trials. In February 2014, the government had informed Parliament that one billion plastic notes of Rs 10 denomination would be introduced in a field trial in five cities selected for their geographical and climatic diversity. The selected cities were Kochi, Mysore, Jaipur, Shimla and Bhubaneswar. Plastic notes have an average life span of about five years and are difficult to imitate. Also, currency notes made of plastic are cleaner than paper ones. They were first introduced in Australia to safeguard against counterfeiting. Replying to another question, Meghwal said it was informed by RBI in December 2015 that they have received some banknotes of Rs 1,000 without having security thread which were printed at Currency Note Press (CNP), Nashik, on paper supplied by Security Paper Mill (SPM), Hoshangabad. An enquiry has been initiated by Security Printing and Minting Corporation (SPMCIL) and the units involved (SPM and CNP). "Major penalty chargesheet has been issued to the personnel concerned. Disciplinary proceedings have been initiated as per departmental rules," the minister said. Meghwal further said action has been taken to strengthen quality procedure and online inspection system in manufacturing process and special training has been given to the persons concerned to avoid such types of mistakes in future. "Additional inspections have been introduced to ensure defect-free production," he said. (PTI)

Demonetisation: Government to print plastic banknotes

The 6-member monetary policy committee (MPC) of the RBI met for the second time since its inception to decide on the key monetary policy indicators of India. The decision taken by the MPC comes as a shock to many as one of the key rates i.e. the repo rate has been kept unchanged at 6.25%. 
&nbsp; 
Repo rate is the rate at which banks borrow from the RBI. 
&nbsp; 
Most of the experts, economists and bankers had predicted that the repo rate would be cut by 25 to 50 basis points at the back of slowdown of consumer price index (CPI) and a potential slowdown of the economy due to demonetisation.

CPI is a number that refelects the average price of a basket of consumer goods such as transportation, food and medical care. It is one of the most frequently used statistics for identifying periods of inflation or deflation.

Economics behind cut in the repo rate 
&nbsp; 
If the repo rate is cut, then the banks would be able to borrow at a lesser rate and then, they can pass this to the end-consumers by reducing the lending rates. Reduced lending rates would encourage people to take loans for businesses, education, buying a house and other personal needs, thus increasing the GDP of the country and subsequently the economic growth as well. 
&nbsp; 
However, there is another side to the story. If people are borrowing more, this implies that there are higher investments in the economy. High investments imply&nbsp;increased employment and thus,&nbsp;rise in the demand for goods and services, increasing the price level in the economy.

Whenever the MPC meets, they always have to face this dichotomy of chosing between higher economic growth versus high price levels. 
&nbsp; 
Current decision of MPC 
&nbsp; 
According to the statement of India&rsquo;s central bank, Reserve Bank of India&#39;s governor Urjit Patel, the reason behind keeping the repo-rate unchanged is to meet the&nbsp;inflation targets of 5% (with a plus-minus of 2%) for the last quarter&nbsp;of the&nbsp;financial year 2016-17. 
&nbsp; 
It seems that the inflation targeting took precedence over any other consideration while deciding the repo rate. Three main reasons that seem plausible for such hawkish approach are:

<ul>
	<li>Implementation of seventh pay commission recommendations can lead to rise in inflation &nbsp;</li>
	<li>Rise in domestic food prices</li>
	<li>Rise in crude oil prices after OPEC&rsquo;s decision to cut production</li>
</ul>

&nbsp; 
In the past couple of weeks, post demonetisation several experts and prominent organisations have cut down the GDP forecast for Indian economy. Even the RBI today cut the growth forecast for this fiscal from 7.6% to 7.1%. &nbsp;Thus, experts believed that RBI would cut the repo-rate to stimulate the economy and achieve the growth targets. 
&nbsp; 
However, it is believed that with the deposit of Rs 11.55 crore in banks post-demonetisation, there is excess liquidity in banks which would anyways encourage the banks to reduce their lending rates whether the repo rate cut happens or not. 
&nbsp; 
Some private banks like ICICI, Axis bank and Bank of Baroda have already reduced their lending rates in the past week before the meeting of MPC. 
&nbsp; 
No sweat over liquidity crunch 
&nbsp; 
Post-demonetisation, the Indian economy is reeling under liquidity crunch with thousands of people queuing outside ATMs and banks each day to withdraw money.&nbsp; 
&nbsp; 
During the press conference, RBI officials showed fair amount of confidence and said that the situation is under control as far as the liquidity is concerned. According to RBI officials, the remonetisation exercise is in full throttle with all the five printing presses of both RBI and government working to full capacity to print new notes. From November 10th to December 5th, RBI has printed currency worth Rs 4 lakh crore of higher denominations like the Rs 500 and Rs 2000 and during the same period, around 19.1 billion pieces of Rs 100, Rs 50 and Rs 20 denomination notes were printed. 
&nbsp; 
The RBI officials also mentioned that they may reduce the number of notes being printed as people are increasingly moving towards digital modes of payment. &nbsp; 
&nbsp; 
Clear distinction between monetary and fiscal policy 
&nbsp; 
Going by the textbook, the main monetary policy indicators are price level and money supply and the monetary policy lies in the domain of the central bank of a country, in this case, RBI. 
&nbsp; 
The fiscal policy is the domain of the government of a country and both the monetary and fiscal policy have to work in tandem for the future growth and economic stability of a country.&nbsp; 
&nbsp; 
Today, it can be observed that the RBI stuck to its side of the policy mandate, focusing completely on inflation targeting and trusting the government to work on the GDP front.

In the coming months, one should be on the lookout for the figures of the major economic indicators to get a sense of how the demonetisation policy has worked for India.

(WION)

 
&nbsp;

Most experts, economists and bankers had predicted the repo rate would be cut by 25 to 50 basis points

The 6-member monetary policy committee (MPC) of the RBI met for the second time since its inception to decide on the key monetary policy indicators of India. The decision taken by the MPC comes as a shock to many as one of the key rates i.e. the repo rate has been kept unchanged at 6.25%. Repo rate is the rate at which banks borrow from the RBI. Most of the experts, economists and bankers had predicted that the repo rate would be cut by 25 to 50 basis points at the back of slowdown of consumer price index (CPI) and a potential slowdown of the economy due to demonetisation. CPI is a number that refelects the average price of a basket of consumer goods such as transportation, food and medical care. It is one of the most frequently used statistics for identifying periods of inflation or deflation. Economics behind cut in the repo rate If the repo rate is cut, then the banks would be able to borrow at a lesser rate and then, they can pass this to the end-consumers by reducing the lending rates. Reduced lending rates would encourage people to take loans for businesses, education, buying a house and other personal needs, thus increasing the GDP of the country and subsequently the economic growth as well. However, there is another side to the story. If people are borrowing more, this implies that there are higher investments in the economy. High investments imply increased employment and thus, rise in the demand for goods and services, increasing the price level in the economy. Whenever the MPC meets, they always have to face this dichotomy of chosing between higher economic growth versus high price levels. Current decision of MPC According to the statement of India’s central bank, Reserve Bank of India's governor Urjit Patel, the reason behind keeping the repo-rate unchanged is to meet the inflation targets of 5% (with a plus-minus of 2%) for the last quarter of the financial year 2016-17. It seems that the inflation targeting took precedence over any other consideration while deciding the repo rate. Three main reasons that seem plausible for such hawkish approach are: Implementation of seventh pay commission recommendations can lead to rise in inflation Rise in domestic food prices Rise in crude oil prices after OPEC’s decision to cut production In the past couple of weeks, post demonetisation several experts and prominent organisations have cut down the GDP forecast for Indian economy. Even the RBI today cut the growth forecast for this fiscal from 7.6% to 7.1%. Thus, experts believed that RBI would cut the repo-rate to stimulate the economy and achieve the growth targets. However, it is believed that with the deposit of Rs 11.55 crore in banks post-demonetisation, there is excess liquidity in banks which would anyways encourage the banks to reduce their lending rates whether the repo rate cut happens or not. Some private banks like ICICI, Axis bank and Bank of Baroda have already reduced their lending rates in the past week before the meeting of MPC. No sweat over liquidity crunch Post-demonetisation, the Indian economy is reeling under liquidity crunch with thousands of people queuing outside ATMs and banks each day to withdraw money. During the press conference, RBI officials showed fair amount of confidence and said that the situation is under control as far as the liquidity is concerned. According to RBI officials, the remonetisation exercise is in full throttle with all the five printing presses of both RBI and government working to full capacity to print new notes. From November 10th to December 5th, RBI has printed currency worth Rs 4 lakh crore of higher denominations like the Rs 500 and Rs 2000 and during the same period, around 19.1 billion pieces of Rs 100, Rs 50 and Rs 20 denomination notes were printed. The RBI officials also mentioned that they may reduce the number of notes being printed as people are increasingly moving towards digital modes of payment. Clear distinction between monetary and fiscal policy Going by the textbook, the main monetary policy indicators are price level and money supply and the monetary policy lies in the domain of the central bank of a country, in this case, RBI. The fiscal policy is the domain of the government of a country and both the monetary and fiscal policy have to work in tandem for the future growth and economic stability of a country. Today, it can be observed that the RBI stuck to its side of the policy mandate, focusing completely on inflation targeting and trusting the government to work on the GDP front. In the coming months, one should be on the lookout for the figures of the major economic indicators to get a sense of how the demonetisation policy has worked for India. (WION)

Why the RBI kept interest rates unchanged despite demonetisation

Taking markets by surprise, RBI Governor Urjit Patel today kept short term lending rate unchanged even as the central bank lowered GDP growth rate to 7.1 per cent and short term disruption in economic activities due to demonetisation.

Patel-led 6-member Monetary Policy Committee, which had in its first policy review cut interest rate by 0.25 per cent in October, belied expectations to keep benchmark repo rate unchanged at 6.25 per cent unanimously.

In view of disruption in economic activities due to demonetisation, RBI lowered growth forecast from 7.6 per cent to 7.1 per cent for the current fiscal.

The headline inflation is projected at 5 per cent by the fourth quarter of 2016-17 with risks tilted to the upside but lower than in the October policy review.

The fuller effects of the house rent allowances under the Seventh Pay Commission award are yet to be assessed, pending implementation, and have not been reckoned in this baseline inflation path, the fifth bi-monthly monthly monetary policy said.

On demonetisation, it said, the withdrawal of old high value currency notes could transiently interrupt some part of industrial activity in November-December due to delays in payments of wages and purchases of inputs, although a fuller assessment is awaited.

&quot;In the services sector, the outlook is mixed with construction, trade, transport, hotels and communication impacted by temporary old currency notes effects, while public administration, defence and other services would continue to be buoyed by the 7th Central Pay Commission (CPC) award and one rank one pension (OROP),&quot; it added.

The central bank also said that almost Rs 12 lakh crore out of total Rs 14.5 lakh crore in scrapped notes have already been deposited in banks.

RBI has also withdraw 100 per cent incremental Cash Reserve Ratio (CRR) from December 10, a move that would allow banks to retain the deposits coming to them as part of demonetisation.

All the six members of Monetary Policy Committee headed by the RBI Governor voted in favour of the today&#39;s decision. 
In the view of the Committee, this bi-monthly review is set against the backdrop of heightened uncertainty.

&quot;Globally, the imminent tightening of monetary policy in the US is triggering bouts of high volatility in financial markets, with the possibility of large spillovers that could have macroeconomic implications for emerging markets,&quot; it said.

While supply disruptions in the backdrop of currency replacement may drag down growth this year in India, it is important to analyse more information and experience before judging their full effects and their persistence, RBI said, adding that short-term developments that influence the outlook disproportionately warrant caution with respect to setting the monetary policy stance.

&quot;On balance, therefore, it is prudent to wait and watch how these factors play out and impinge upon the outlook. Accordingly, the policy repo rate has been kept on hold in this review, while retaining an accommodative policy stance,&quot; it said.&nbsp;

 
Highlights of RBI&#39;s fifth bi-monthly monetary policy statement, 2016-17:

<ul>
	<li>&nbsp;Repo rate unchanged at 6.25%, Reverse Repo at 5.75%</li>
	<li>&nbsp;Cash reserve ratio or CRR unchanged at 4%</li>
	<li>&nbsp;Cuts growth forecast to 7.1%, from 7.6% for this fiscal</li>
	<li>&nbsp;Inflation target remains 5% for March 2017, upside risk</li>
	<li>&nbsp;Demonetisation to lower prices of perishables</li>
	<li>Could reduce inflation by 10-15 basis points by December</li>
	<li>&nbsp;All MPC members voted in favour of status quo in policy</li>
	<li>&nbsp;Demonetisation to result in short-run disruptions in Cash-intensive sectors</li>
	<li>Crude price volatility, surge in financial market</li>
	<li>Turbulence could put March end inflation target at risk</li>
	<li>&nbsp;Foreign exchange reserve rose to all-time high of</li>
	<li>USD 364 billion on December 2</li>
	<li>&nbsp;RBI injected Rs 1.1 lakh crore liquidity through OMO purchases this fiscal</li>
	<li>Next monetary policy on February 8</li>
</ul>

(PTI)

The RBI's monetary policy committee voted 6-0 to leave the repo rate unchanged, after cutting it by 25 basis points (bps) last October

Taking markets by surprise, RBI Governor Urjit Patel today kept short term lending rate unchanged even as the central bank lowered GDP growth rate to 7.1 per cent and short term disruption in economic activities due to demonetisation. Patel-led 6-member Monetary Policy Committee, which had in its first policy review cut interest rate by 0.25 per cent in October, belied expectations to keep benchmark repo rate unchanged at 6.25 per cent unanimously. In view of disruption in economic activities due to demonetisation, RBI lowered growth forecast from 7.6 per cent to 7.1 per cent for the current fiscal. The headline inflation is projected at 5 per cent by the fourth quarter of 2016-17 with risks tilted to the upside but lower than in the October policy review. The fuller effects of the house rent allowances under the Seventh Pay Commission award are yet to be assessed, pending implementation, and have not been reckoned in this baseline inflation path, the fifth bi-monthly monthly monetary policy said. On demonetisation, it said, the withdrawal of old high value currency notes could transiently interrupt some part of industrial activity in November-December due to delays in payments of wages and purchases of inputs, although a fuller assessment is awaited. "In the services sector, the outlook is mixed with construction, trade, transport, hotels and communication impacted by temporary old currency notes effects, while public administration, defence and other services would continue to be buoyed by the 7th Central Pay Commission (CPC) award and one rank one pension (OROP)," it added. The central bank also said that almost Rs 12 lakh crore out of total Rs 14.5 lakh crore in scrapped notes have already been deposited in banks. RBI has also withdraw 100 per cent incremental Cash Reserve Ratio (CRR) from December 10, a move that would allow banks to retain the deposits coming to them as part of demonetisation. All the six members of Monetary Policy Committee headed by the RBI Governor voted in favour of the today's decision. In the view of the Committee, this bi-monthly review is set against the backdrop of heightened uncertainty. "Globally, the imminent tightening of monetary policy in the US is triggering bouts of high volatility in financial markets, with the possibility of large spillovers that could have macroeconomic implications for emerging markets," it said. While supply disruptions in the backdrop of currency replacement may drag down growth this year in India, it is important to analyse more information and experience before judging their full effects and their persistence, RBI said, adding that short-term developments that influence the outlook disproportionately warrant caution with respect to setting the monetary policy stance. "On balance, therefore, it is prudent to wait and watch how these factors play out and impinge upon the outlook. Accordingly, the policy repo rate has been kept on hold in this review, while retaining an accommodative policy stance," it said. Highlights of RBI's fifth bi-monthly monetary policy statement, 2016-17: Repo rate unchanged at 6.25%, Reverse Repo at 5.75% Cash reserve ratio or CRR unchanged at 4% Cuts growth forecast to 7.1%, from 7.6% for this fiscal Inflation target remains 5% for March 2017, upside risk Demonetisation to lower prices of perishables Could reduce inflation by 10-15 basis points by December All MPC members voted in favour of status quo in policy Demonetisation to result in short-run disruptions in Cash-intensive sectors Crude price volatility, surge in financial market Turbulence could put March end inflation target at risk Foreign exchange reserve rose to all-time high of USD 364 billion on December 2 RBI injected Rs 1.1 lakh crore liquidity through OMO purchases this fiscal Next monetary policy on February 8 (PTI)

Reserve Bank of India keeps repo rate unchanged at 6.25%

India&#39;s important monitory policy decision over rate cut will be made on Wednesday by the Reserve Bank of India (RBI).

Today&#39;s announcement will be a crucial one, given that demonetisation has wiped out liquidity from the market while infusing additional liquidity in banks.

The&nbsp;six-member monetary policy committee (MPC) will be guiding the RBI on the rate cut. Most experts and analysts predict a 25 basis points rate cut on the back of the slowdown in the economy post the demonetisation move by the government.

RBI governor Urjit Patel who will be addressing the media today, will not only have to deal with questions on the rate cut but also the implementation of the demonetisation move as he will speak to media for the first time since the surgical strike on black money. The key lending rate could be reduced by 25 to 50 basis points.

The current repo rate stands at 6.25 per cent&nbsp;after the RBI governor cut the lending rate by 25 basis points in October.

The decision of the central bank will have multiple effects.

The 25 basis point repo rate cut is likely to be influenced by inflationary pressure on the&nbsp;economy, a&nbsp;possible slowdown, fall in consumer discretionary spending and&nbsp;rupee depreciation to the dollar.

The currency drain out impacts the consumer discretionary spending. Most brokerage reports have given a 1 per cent downgrade on the GDP outlook for India post demonetisation. India has clocked in 7.3 per cent growth in July-September -&nbsp;a number that reflects growth pre-demonetisation.

Whether India can continue the rate of growth&nbsp;remains to be seen. A cut in repo rate will enable banks to borrow at lower interest rates and the banks can transfer the benefits to the end consumer. Even the rising oil prices pose a threat to the economy, impacting the RBI&#39;s decision on the repo rate cut.

The central bank&nbsp;will also have to consider the movement in the rupee, as a sharp depreciation of the rupee has ensured withdrawals from the FCNR&nbsp;(Foreign Currency Non-Residential) deposits. A higher demand for dollar depreciates the value of the rupee.

The US Fed rate hike, expected this month at the Federal Open Market Committee (FOMC), will be closely monitored.&nbsp;If the Fed decides to hike rates, it will make the United States a more attractive destination for investors to park their funds compared to the other emerging markets, especially India.

This has a direct impact on the Indian currency and experts feel it could depreciate the rupee further. Amidst these concerns that loom large, the RBI will have to be extremely careful on the extent to which it slashes the repo rate, as inflation and rupee depreciation&nbsp;pose to be major deterrents.

(WION)

This could mean banks lending at lower interest rates, transferring the benefits to the end consumer

India's important monitory policy decision over rate cut will be made on Wednesday by the Reserve Bank of India (RBI). Today's announcement will be a crucial one, given that demonetisation has wiped out liquidity from the market while infusing additional liquidity in banks. The six-member monetary policy committee (MPC) will be guiding the RBI on the rate cut. Most experts and analysts predict a 25 basis points rate cut on the back of the slowdown in the economy post the demonetisation move by the government. RBI governor Urjit Patel who will be addressing the media today, will not only have to deal with questions on the rate cut but also the implementation of the demonetisation move as he will speak to media for the first time since the surgical strike on black money. The key lending rate could be reduced by 25 to 50 basis points. The current repo rate stands at 6.25 per cent after the RBI governor cut the lending rate by 25 basis points in October. The decision of the central bank will have multiple effects. The 25 basis point repo rate cut is likely to be influenced by inflationary pressure on the economy, a possible slowdown, fall in consumer discretionary spending and rupee depreciation to the dollar. The currency drain out impacts the consumer discretionary spending. Most brokerage reports have given a 1 per cent downgrade on the GDP outlook for India post demonetisation. India has clocked in 7.3 per cent growth in July-September - a number that reflects growth pre-demonetisation. Whether India can continue the rate of growth remains to be seen. A cut in repo rate will enable banks to borrow at lower interest rates and the banks can transfer the benefits to the end consumer. Even the rising oil prices pose a threat to the economy, impacting the RBI's decision on the repo rate cut. The central bank will also have to consider the movement in the rupee, as a sharp depreciation of the rupee has ensured withdrawals from the FCNR (Foreign Currency Non-Residential) deposits. A higher demand for dollar depreciates the value of the rupee. The US Fed rate hike, expected this month at the Federal Open Market Committee (FOMC), will be closely monitored. If the Fed decides to hike rates, it will make the United States a more attractive destination for investors to park their funds compared to the other emerging markets, especially India. This has a direct impact on the Indian currency and experts feel it could depreciate the rupee further. Amidst these concerns that loom large, the RBI will have to be extremely careful on the extent to which it slashes the repo rate, as inflation and rupee depreciation pose to be major deterrents. (WION)

Reserve Bank of India likely to cut repo rate by 25-50 basis points

Rbi, News on Rbi, stories on Rbi, articles on Rbi, Rbi stories at Wion, Rbi news, Rbi latest news

rbi

Non-performing assets a legacy issue, RBI governor says

No restrictions on withdrawals from savings bank accounts from March 13: RBI

RBI keeps repo rate unchanged at 6.25% for second meeting in a row

Sensex, Nifty trade lower ahead of RBI policy meet

No limit on cash withdrawal from ATMs February 1 onwards: India's central bank

India's central bank, poll panel spar over enhancing cash withdrawal limit for election candidates

Govt went ahead with demonetisation despite 'central bank concerns'

RBI was created to be independent of the Centre: Kapil Sibal

'Humiliated' RBI staff write to Urjit Patel, say bank's image 'dented beyond repair'

Indian govt respects central bank's autonomy, says finance ministry amid row

Reduce borrowing levels to avoid economic volatility, warns RBI

Demonetisation: Parliamentary committee may summon Indian PM Narendra Modi

Parliamentary committee to question governor of India's central bank over demonetisation

Parliamentary committee to question governor of India's central bank over demonetisation

Demonetisation: India's central bank directs banks to supply at least 40% of notes to rural areas

RBI refuses to say if finance minister was consulted before demonetisation

Demonetisation: No mad rush in banks on last day of depositing old notes

Demonetisation: India's central bank doesn't divulge reasons for cash scrap

Who is Viral Acharya?

Govt mulls over imposing heavy fine on possession of banned notes above Rs 10,000

Demonetisation: Opposition leader Rahul Gandhi accuses PM Modi of graft

Demonetisation: Reserve Bank of India changes old currency deposit rules for 60th time

Demonetisation: Old notes worth more than Rs 5,000 can now be deposited only once till Dec 30

Demonetisation: Significant number of Rs 500 notes being printed, says Indian government