Terming demonetisation a “once in a lifetime event” that requires mammoth logistics, Governor Urjit Patel said 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 soon.
Speaking for the first time after the decision to withdraw old Rs.500 and Rs.1,000 notes, Dr. 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.
Mission mode
“Both RBI and government have been getting the printing presses to work at capacity to get the new notes available to meet demand. RBI is interacting with the banks daily. They are telling us that the situation is gradually easing. The queues in branches and ATMs are shorter and the markets are starting to function, and there are no reported shortages of daily items of consumption,” he said.
“Also, about 40-50,000 people were deployed to refit the ATMs. Currency is available and banks are working in a mission mode to lift currency and take them to their branches and ATMs. The staff members of all banks have worked very hard, and we all owe them our gratitude,” Dr. Patel told PTI in an interview.
On why there have been long queues and a reduction in trade and business, Dr. 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 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.
Cash substitutes
Dr. Patel said the RBI has 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 once the Centre issues adequate quantum of Market Stabilisation Scheme bonds which they have promised to do.
He 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.”
The Prime Minister in his address to the nation explained why the withdrawal of legal tender status of Rs. 1,000 and Rs.500 notes was required, he said.
“He had given a commitment to the people of India that he would clamp down on black money to bring in much-needed transparency and accountability and eradicate counterfeiting,” the RBI Governor said.
