An unfortunate consequence of this increasingly ugly political slugfest that any “discussion” on demonetisation has become is the dragging of an upright, well-respected RBI Governor into unnecessary controversy. A man too decent to counter all the moronic comments.
There is every indication that all due process was followed before this important decision was announced. The RBI discussed it and made a recommendation. Once the government accepted it, and decided on November 8, 2016 to announce it, approval was taken first from the RBI Central Board and then the Union Cabinet, both of which approved it. The President was also duly informed by the PM before he made his address to the nation.
There would be well be differences on whether the demonetisation was needed, and if there were shortcomings in implementation, however there was no slip-up in procedures. In any case, this issue of constitutional validity of the decision is already being considered by Supreme Court.
To therefore try to use the RBI Governor to score political points is extremely unfortunate. The present Governor, like most of his predecessors, understandably keeps a low profile, speaking when necessary. It is neither necessary, nor in fact advisable, for a Central Bank Governor to fashion himself as a Page 3 celebrity making controversial statements everyday as “evidence” of his independence.
Corruption in the banking sector over the years has been no secret. It is impossible for this sector to remain immune when general values in society were eroding. However, even people like me who have been associated with this sector for years, have I am sure been quite shocked at the extent of rot and greed in banking employees. For sure, the actual number of such black sheep is quite small from all indications, as compared to the total number of employees, and most of the employees have acquitted themselves very well during trying times.
As such feedback of wrongdoing came in, RBI was forced to react and issue some clarifications and make some modification in their notifications. This has understandably led to some confusion in the minds of the public. In hindsight that process could have been handled a lot better but given that an exercise of this size and scale has never been attempted before it was natural that there would be some leaning and correction as they went along.
In the coming days, we might well see many more officials getting caught and the law in that regard will take its course. Enough data and information has been collected by agencies for this to happen. However, it would certainly be prudent to ensure that reputation of banks in general and the RBI is not unduly affected. Banks will remain and will continue to play the role they are expected to in society and in the growth of the economy.