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One Day Before Demonetisation, Govt 'Advised' RBI to 'Consider' Note Ban

School students participate in a painting competition on 'Cashless India' in Ahmedabad on December 31. (PTI Photo)

School students participate in a painting competition on 'Cashless India' in Ahmedabad on December 31. (PTI Photo)

It was the Centre that “advised” the RBI to go for demonetization and the not the other way round as has been claimed earlier, The Indian Express reported quoting a note submitted by the central bank to a parliamentary panel.

It was the Centre that “advised” the RBI to go for demonetisation and the not the other way round as has been claimed earlier, The Indian Express reported quoting a note submitted by the central bank to a parliamentary panel.

“Government, on 7th November 2016, advised the Reserve Bank that to mitigate the triple problems of counterfeiting, terrorist financing and black money, the Central Board of the Reserve Bank may consider withdrawal of the legal tender status of the notes in high denominations of Rs 500 and Rs 1,000,” the Express quoted from a seven-page RBI note submitted on December 22 to the Parliament’s Department Related Committee of Finance headed by Congress leader M Veerappa Moily.

A day later, the RBI Central Board met “to consider the government advice” and after “deliberations” decided to recommend to the Central Government that the legal tender status of the banknotes in the high denominations of Rs 500 and Rs 1000 be withdrawn.” The Government “considered the recommendations” and decided to withdraw the notes, says the report.

A week after Prime Minister Narendra Modi’s November 8 address to the nation in which he announced the decision to scrap Rs 500 and Rs 100 notes thus removing 86% of the country’s currency in circulation in one go, Power minister Piyush Goyal had told Rajya Sabha that the decision to demonetize was taken by the RBI board.