It was the government that advised the RBI to consider demonetisation

Demonetisation have stained the Reserve Bank of India’s image as during the 50-day period, people across the nation went through an acute cash crunch and if you were blaming the RBI for note ban, you should know it was PM Narendra Modi-led Government that advised the RBI to go for demonetisation and the not the other way round.

An Indian Express report quoted a note submitted by the central bank to a parliamentary panel saying that it was Centre’s plan and not RBI.

“Government, on 7th November 2016, advised the Reserve Bank that to mitigate the triple problems of counterfeiting, terrorist financing and black money, the Central Board of the Reserve Bank may consider withdrawal of the legal tender status of the notes in high denominations of Rs 500 and Rs 1,000,” the Indian Express quoted from a seven-page RBI note submitted.

A day after all this happened, the RBI Central Board met “to consider the government advice” and after “deliberations” decided to recommend to the Central Government that the legal tender status of the banknotes in the high denominations of Rs 500 and Rs 1000 be withdrawn.” The Government “considered the recommendations” and decided to withdraw the notes, says the report.

However, Power Minsiter Piyush Goyal had told Rajya Sabha that the decision to demonetize was taken by the RBI board.