“Panel questions behind move; says banks stretched to help Centre post note ban”
The Committee on Government Assurances has questioned the rationale behind banks being asked to bear the cost of soiled and counterfeit notes, particularly during the demonetisation exercise of 2016.
In the report that was tabled in the Rajya Sabha on Monday, the committee said it did not understand the rationale behind the policy wherein the banks had been asked to bear the losses arising out from mutilated and counterfeit notes, when they had no role in mutilating or circulating counterfeit notes, particularly just after demonetisation when they had the onerous task of handling huge cash flow.
The soiled notes were more than doubled in 2017-18 compared to the previous financial year. According to RBI data, 27,678 million pieces of soiled notes were disposed of by banks in 2017-18 compared to 12,503 million pieces in 2016-17. Over 99% of the notes that were rendered invalid by demonetisation had returned from circulation. However, the number of counterfeit notes detected in 2017-18 was lower at 5,22,738 pieces as against 7,62,072 in the previous year. The committee also felt that it was improper to penalise the banks especially at a time when they had stretched their limits to support the government during demonetisation process and has recommended that the Department of Economic Affairs should consider relaxing note refund rules in this regard.
A Navaneethakrishnan, Chairman, Committee on Government Assurances, presented the 72nd Report of the Committee to the Rajya Sabha.
The panel discussed the issue with some public sector banks and representatives of the RBI, NABARD and Department of Economic Affairs and Ministry of Finance on its study visits to Kolkata, Chennai and Bengaluru.
The committee deals with the culling of assurances, examination of implementation of assurances, and dropping of assurances given by Ministers while replying to questions raised by Members during the proceedings of the Rajya Sabha