Urjit breaks silence, says RBI taking steps to ease people's pain

Mumbai: Terming demonetisation as a "once in a lifetime event" that requires mammoth logistics, Governor Urjit Patel on Sunday said the RBI is taking all necessary actions to "ease the genuine pain of citizens who are honest and who have been hurt" and hoped things will normalise at the earliest.

Speaking for the first time after the decision to withdraw old Rs 500 and Rs 1,000 notes, Patel who has been facing criticism for keeping silent, also said the situation is being monitored on a daily basis while printing presses have started to rebalance the production of new notes towards Rs 100 and Rs 500 bills.

Terming the demonetisation as a “once-in-a-lifetime event” that requires mammoth logistics, the Reserve Bank of India (RBI) Governor Urjit Patel on Sunday said that the central bank was taking all necessary actions to “ease the genuine pain of citizens who are honest and who have been hurt” and hoped things would normalise at the earliest.

Speaking for the first time after the decision to withdraw old Rs 500 and Rs 1,000 notes, Patel who has been facing criticism for keeping silent, also said the situation was being monitored on a daily basis while printing presses had started to rebalance the production of new notes towards Rs 100 and Rs 500 bills.

Giving details of the steps being taken by the RBI, he said, “Both RBI and the government have been getting the printing presses to work at capacity to get the new notes available to meet demand. The RBI is interacting with the banks every day. They are telling us that the situation is gradually easing,” Patel said.

On why there have been long queues and a reduction in trade and business, Patel said, “This is a once-in-a-lifetime event. It is very rare to remove 86 per cent of the currency in circulation in one go. The logistics of such an operation is mammoth.”“And yet for the withdrawal of legal tender status to be effective, complete secrecy was required.

So, it is difficult to get all banks ready and fully prepared in 24 hours for a big step like this. Obviously, this has caused some dislocation. That is why we request support from all Indians for the larger cause of fighting tax evasion and the black economy,” he said.

Patel said RBI had announced an incremental CRR (cash reserve ratio) of 100 per cent “because of the large increase in deposits of banks on account of the return of Rs 1,000 and Rs 500 notes” and the decision would be reviewed immediately once the government issues adequate quantum of MSS (Market Stablisation Scheme) bonds, which they have promised to do.”

He also urged people to start using cash substitutes like debit cards and digital wallets, saying it will make transactions cheaper and easier and in the long-term and it will help India “leapfrog into a less cash-use economy at par with more developed nations”.

Asked why it was necessary to have undertaken demonetisation, the Governor said, “People were holding high denomination notes to keep tax unaccounted for money. Some sectors like real estate were using cash to avoid tax. It also strikes at counterfeit currency and pushes businesses and people to go cashless which greatly increases convenience. Towards the last, banks have waived debit card charges,” he said.