New Delhi: While the formal decision to effect demonetisation was taken on November 8, consultations with the RBI at a very senior level had commenced as early as February, Union finance minister Arun Jaitley said on Tuesday.
Replying to questions in the Rajya Sabha, Jaitley said the RBI board had “independently” applied its mind and made the recommendation to demonetise two high-value currency denominations.
“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,” said Jaitley.
“Thereafter… meetings used to be held periodically… where the seniors in the RBI as also in the government were in consultation. Because the decision had to be kept in utmost secrecy… these were not put into public domain,” he added. Jaitley said eight of the 10 RBI directors were present at the November 8 meeting after which the final recommendation with regard to demonetisation was made to the government. Asked about charges levied on digital transactions, which the government is trying to promote, Jaitley said the RBI was working on it, and that with an increase in volume, the charges would come down.
He said the RBI was working to fix the merchant discount rate (MDR) for debit card transactions above Rs 2 lakh. Jaitley said under the Payments and Settlements Act, the RBI had held that for cash transactions up to Rs 1,000, the MDR rate would be 0.25% and 0.5% for transactions up to Rs 2,000. Newer technologies are making digital transactions cheaper and it is expected that more people would move towards them, he said, adding that the government has also advised its officials to use digital money.
The FM said demonetisation was one of the steps that the NDA government has taken to curb black money, which also include the formation of an SIT.
In a written reply to the RS, Jaitley said over Rs 16,200 crore in black money had been detected by the government after investigations into global leaks about Indians stashing funds abroad.
“As a result of systematic investigations, undisclosed income of about Rs 8,200 crore (including protective assessment of income of Rs 1,497 crore) has been brought to tax in about 2 years on account of deposits made in unreported foreign bank accounts in HSBC. Further, about Rs 8,000 crore of credits in the undisclosed foreign accounts of Indians, whose names were disclosed by the International Consortium of Investigative Journalists (ICIJ), have been detected,” the F M said.