A former chief of State Bank of India, India’s largest lender, has come out and said that RBI has been “lying” to people’s faces about the situation of cash in the country.
In an interview to the website Firstpost, former State Bank of India Chairman Pratip Chaudhuri said that the central bank should have been more transparent in the implementation rather than “running away and hiding”.
The veteran banker was also of the view that the situation in the country will not normalize for the next three months and that it would have a lasting impact on the economy.
According to the report, Chaudhuri is of the view that pulling out close to 86% of the cash from the system was not the way to go about curbing black money, saying that the note-ban would have helped in checking fake currency but not ‘black money’.
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Chaudhuri also seemed of the view that the government’s will to have the ban was imposed on the RBI who “couldn’t do much”. He however is quoted as saying that in situations like this, it is the RBI who acts as a fire-fighter but the institution seems to be running away from the problem.
Chaudhuri was also asked about the RBI assurances that there was enough cash in the system to around. He reportedly says that “RBI is lying in this case. If they have enough cash, there are 2 lakh ATMs in this country. What prevents them from putting one crore rupees in each of these ATMs and saying you draw Rs 5,000 or Rs 10,000?” he reportedly asks, adding that the crowds in the queues would have then diminished.
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On the impact on the economy, Chauduri is quoted saying that the consumption has been hit quite badly and that the informal sector isn’t doing so well either.
