RBI began printing Rs 500 notes only two weeks after note ban announcement

The Reserve Bank of India began printing the new Rs 500 notes two weeks after Prime Minister Narendra Modi had declared the old currency notes illegal.

While responding to an RTI request filed by an Ahmedabad-based activist, Parag Patel, the federal bank admitted that the printing of new Rs 500 notes could only start on 23 November at its own Bharatiya Reserve Bank Note Mudran Private Limited printing press.

The reply (see below) said, ” First stage of printing process of new Rs 500 banknote commenced on November 23, 2016 at BRBNMPL.

The RBI also confirmed that the printing of new Rs 2,000 notes had started in September 2016, two months before the demonetisation announcement was made.

Patel, the RTI activist, who filed the request, said that the new revelations made by the RBI put ‘the seizures of crores of new Rs 2,000 notes in perspective.’

Most of us always wondered as to how some individuals were able to access the new high denomination currency notes in such large volume despite there being so many restrictions on withdrawals. The RBI’s reply clearly establishes that some people, in the know of the government’s plan, were able to exchange their old notes with the new ones much before the prime minister even announced the note ban,” Patel told Janta Ka Reporter.

Patel said that he was also shocked to learn that the Centre’s BJP government had gone ahead with the demonetisation move even without starting the printing of new Rs 500 notes.

He said, “It appears that this demonetisation was intentionally executed to create problem for ordinary citizens.”

These two disclosures assume significance in light of hardship faced by millions in accessing their own hard-earned money from their banks and ATMs.

More than 100 people have died due to demonetisation related stress since 8 November. The RBI has come under attack for deliberately avoiding transparency in stating the facts before suffering public. Many analysts felt that this was because of the central government being able to arm-twist the RBI, an otherwise autonomous financial institution of repute.

Gita Gopinath, an economist from Harvard University and also an advisor to Kerala chief minister, agreed that the RBI should have done better with communication to ordinary public.

She told NDTV’s Walk The Talk programme, “There could have more regular communication with the public than what has happened. There could have more transparency on how this particular policy would affect people…He(Urjit Patel) is terrific. In fact I was very happy for him being appointed the RBI Governor…I would only encourage him to speak up little more frequently than we’ve heard from him and to have more clarity on how this policy is going to play out.”

The RBI had issued more than 70 rules during the 50-day demonetisation period with the federal bank becoming an subject of huge social media ridicule. Many felt that this confusion was an outcome of the Modi government’s alleged arms-twisting tactics and the current’s incumbent’s predecessor, Raghuram Rajan, wouldn’t have allowed the central government to play with the reputation of the institution such as the RBI.

The RBI has also been accused of printing notes with plenty of errors, which experts said would defeat the stated objective of fighting the menace of counterfeit currency in India. The federal bank, for its part, has blamed the haste in which they were forced to print new notes.