Urjit Patel assures PAC: Cash crunch will end soon; RBI will cut digital transaction costs
RBI Governor Urjit Patel Friday assured the Public Accounts Committee that the cash crunch will be over in the coming few days. He also said the central bank is planning to cut online transaction charges to promote digital banking in the country.
The parliamentary panel had earlier sent a questionnaire to Patel seeking details about the demonetisation exercise and its impact on the economy, among other issues.
On the impact of demonetisation on the economy, Patel claimed that it will positively impact the GDP in the longer run. "He informed that the situation is improving and efforts are being made to improve cash flow in rural areas. He was confident about the situation improving in urban areas," a member of the panel said, requesting anonymity.
When one PAC member raised the issue of "abnormal deposits" being made in cooperative banks, the RBI governor said the Financial Intelligence Unit and the Income Tax Department are probing such discrepancies.
Apart from Patel, two deputy governors of the RBI - R Gandhi and SS Mundra - and five directors - Bharat Doshi, Sudhir Mankad, Shaktikanta Das, Nachiket Mor and Anjuly Chib Duggal - also attended the four-hour meeting with the PAC.
"A lot of the PAC members wanted to ask questions about demonetisation, but some argued that the entire monetary policy should be discussed. Most BJP members agreed that the monetary policy and demonetisation's impact on the monetary policy are two different matters and that the former should be be given precedence," said a member.
At PAC's previous meeting on 6 January, chairman KV Thomas had created a furore by saying that the panel could summon Prime Minister Narendra Modi if it was not satisfied with the answers of the RBI governor. Thomas retracted his statement after other members decided that the prime minister won't be called before the panel. A statement released by PAC said, "Ministers shall not be called before the committee either to give evidence or consultation in connection with the examination of estimates of accounts. However, the chairperson, when considered necessary, but after its deliberations are concluded, may have an informal interaction with the minister."
In December, the PAC as well as the parliament's Standing Committee on Finance had asked Patel, Economic Affairs Secretary Sashikant Das and Financial Services Secretary Anjuly Chib Duggal to explain the impact of demonetisation on the monetary policy. On 6 January, the panel sent a long list of questions to the RBI chief and sought replies from him on 20 January.
Speaking to reporters after Friday's meeting, Thomas said the PAC will meet again on 10 February and decide whether to summon Patel again. Earlier this week, the Standing Committee on Finance had called Patel and criticised him for not fully answering questions about the note ban. Patel claimed the RBI had issued Rs 9.2 lakh crore in new notes and that cash crunch will ease soon. He, however, did not specify when restrictions on cash withdrawal would be removed or how much money had been deposited in the banks.