New Delhi: A series of consultations were held between the government and top Reserve Bank of India (RBI) functionaries on demonetisation since February last year, before the central bank Board took a formal decision and conveyed it to the government which took the final call, Rajya Sabha was informed on Tuesday.
Finance minister Arun Jaitley said eight of the 10 directors of the RBI Board were present at the 8 November meeting which made an independent final recommendation with regard to demonetisation to government. He said that in May 2016, the RBI Board took a decision on printing currency of higher denomination as a replacement to demonetised currency.
“Consultations at a very senior level with the RBI on this issue had started way back in the month of February 2016 itself. The RBI Board in the month of May 2016, as a part of these consultations, had decided to go in for and approve the design and taken the decision with regard to the high denomination currency which was required to be printed as a replacement currency itself.
“Thereafter a series of meetings used to be held periodically, at times on a defined day once a week, where the seniors in the RBI as also in the government were in consultation. Because the decision had to be kept in utmost secrecy, it is for this particular reason that these were not put into public domain,” Jaitley informed the Rajya Sabha during Question Hour.
Replying to supplementaries, the finance minister said the formal decision in this regard with this background was taken by the RBI on 8 November, but this had been preceded by a series of discussions which had started way back in February 2016 itself.
To a specific question on whether it was the RBI that took the decision of its own or did the government tell it to do so, he said, “The RBI board met and independently applied its mind and made a recommendation to government.