RBI on Friday informed a parliamentary panel that it is working on a mechanism to bring down transaction cost on online payments post demonetisation even as cash flow position in urban as well as rural areas have improved significantly.
RBI Governor Urjit Patel along with Deputy Governor R Gandhi and other senior functionaries appeared before Parliament’s Public Accounts Committee (PAC) for oral evidence on ‘Review of Monetary Policy’. Members asked a host of questions from the RBI Governor, who has been given 15 days time to respond to the queries.
Sources said members were told by RBI that a mechanism was being discussed with stakeholders, including banks and payment gateways, to bring down the cost of transactions in tandem with the government’s initiative to promote digital payments.
It is learnt that Patel said cash flow position has largely improved in the country. However, there are some problems in remote rural areas and members were assured that the situation would improve in the next couple of weeks. To questions on impact of demonetisation on growth, Patel said there may be impact in the short run, but in mid and long term the move is beneficial for the economy.
Later talking to reporters, PAC Chairman K V Thomas said the Committee will meet again on February 10 to discuss the issues with Finance Ministry officials. He further said that the RBI Governor could be called again if required after February 10. Responding to queries by members, RBI said the discussion to demonetise old high value currency between the government and the central bank started in January 2016.
During the nearly four-hour meeting, the panel asked questions regarding significant surge in deposits in several cooperative banks and asked RBI to look into the issue. The legal tender character of old series of Rs 500/1000 notes was cancelled by the government effective midnight of November 8 on the recommendations of the Central Board of RBI.
The Board meeting was attended by Governor Patel, two Deputy Governors (R Gandhi and S S Mundra), and five Directors of RBI — Nachiket Mor, Bharat N Doshi, Sudhir Mankad, Shaktikanta Das and Anjuly Chib Duggal. Sources said another director N S Vishwanathan (Deputy Governor) did not attend the meeting as he stayed back in Mumbai for “strategic reasons” to brief the bankers first hand immediately after the decision on demonetisation was taken. Another director, Natarajan Chandrasekaran was abroad at the time of the meeting.