RBI’s testimony to parliamentary panel shows the bank had warned the government of possible inconvenience to the public for some time
New Delhi/ Mumbai: India pushed ahead with its decision to demonetise high-value banknotes even as the Reserve Bank of India’s (RBI) own board expressed concern whether the cash could be replaced quickly enough, the central bank has said in written testimony to parliament.
The revelation comes amid growing criticism about whether RBI and the government had sufficiently assessed the potential fallout from the 8 November ban of about 86% of the cash then in circulation.
Prime Minister Narendra Modi’s shock demonetisation move caused a severe cash shortage that brought large parts of the economy to a virtual standstill, as the central bank struggled to print new Rs. 500 and Rs. 2,000 notes to replace the old currency.
A copy of the private testimony to a parliament panel, seen by Reuters, showed the central bank had also warned the government of “possible inconvenience to the public for some time,” among the potential consequences of the massive exercise.
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