Rs. 2000 notes printed when Rajan was governor
Reports revealed that even though the Rs. 2000 bears the signature of current RBI governor Urjit Patel, the printing began when Raghuram Rajan was in office. RBI presses stated that the process of printing the new notes began in August 2016, after Patel was named chief. However, Rajan was still RBI chief until 4 September, raising questions as to why Rajan's signatures weren't printed.
Urjit Patel appointed as RBI Governor
After Raghuram Rajan stepped down as RBI's Governor last month, Deputy Governor Urjit Patel was considered as a top contender for the bank's chief role. On 20th Aug 2016, the Indian Government announced that Patel is set to succeed Raghuram Rajan as RBI's 24th Governor. Urjit Patel took over the reins from Rajan when his term ended on 4 September 2016.
India demonetizes Rs. 500, Rs. 1000 notes
On 8 November 2016, PM Modi took a major economic step by abolishing high-value currency notes in the country. He announced that all Rs. 500 and Rs. 1000 notes would be held invalid and in its place fresh Rs. 500 and Rs. 2000 notes would be issued by the banks. This was an effort to counter rising corruption and black money in the country
RBI asks govt to stop interference
RBI alleged that a joint secretary from the finance ministry was being sent to the RBI headquarters to regulate currency procedures. They contested that this was directly affecting RBI's ability to work independently. Employees threatened to go on strike, protesting the erosion of RBI's independence.
RBI-Centre relations strained
The fall-out of the demonetization move saw relations between the RBI deteriorate. The RBI and the Centre disagreed on how demonetization decision was arrived upon, and the RBI contradicted the government's version of events before a parliamentary standing committee. While the RBI said the decision was taken quickly at Centre's behest, the government maintains that the decision was discussed for several months.
Investigations reveal loopholes in demonetization story
In response to an RTI query, the Bharatiya Reserve Bank Note Mudran (P) Ltd said the initial stages of printing new notes began on Aug 22, while Rajan was still the RBI governor. In addition, it came to light that printing Rs. 500 notes began only after 23 November, confirming that the government only printed Rs. 2000 notes, despite knowing the severe crippling cash-crunch.
What are the concerns?
The investigation raised questions on why Raghuram Rajan's signature was not on the new notes. His silence on the matter indicated that there was a stern disagreement between the RBI disposition of the time and the Centre. It also raised questions on Urjit Patel's elevation.
Centre, RBI refuse to go into details
Raghuram Rajan did not respond to emailed queries on the investigation. Similar queries to the Finance Ministry and the RBI also went unanswered. The RBI had told the parliamentary standing committee that it had given permission for printing the new notes as early as June 2016. However, printing commenced on 22 August.
