RBI Board clears proposal to introduce Rs. 200 notes: Another decision in secrecy?

There was a lot of criticism over the introduction of Rs 200o denomination. It was issued immediately after demonetising so called high notes of RS 500 and Rs 1000. Moreover, the velocity of Rs 2000 denomination is much lower and created further chaos. People said if at all, the RBI/ Government should have introduced smaller denomination notes like say Rs 200. This blog’s research also shows that this will be a totally new denomination just like Rs 2000. This has to be first approved by RBI Board and then the Government.

Perhaps taking a cue, RBI Board has cleared printing of Rs 200 note. Gopika Gopakumar of Mint reports:

The board of the Reserve Bank of India (RBI) has cleared a proposal to introduce banknotes of Rs200 denomination, two people aware of the development said.

The decision was taken at the RBI board meeting in March, these people said. They didn’t want to be identified as they aren’t authorized to speak to the media.

The process of printing the new Rs200 notes is likely to begin after June, once the government officially approves this new denomination, said one of the two people cited earlier.

However, there is one catch.

If this is true, then again we have a decision on new currency note taken in secrecy. A lot depends on the veracity of the news.

This time it is even a bigger secret as there was no Board meeting in March as per the website (select 2017 and then March in right menu). As per RBI Act, Section 13:

(1) Meetings of the Central Board shall be convened by the Governor at least six times in each year and at least once in each quarter.
(2) Any [four Directors] may require the Governor to convene a meeting of the Central Board at any time and the Governor shall forthwith convene a meeting accordingly.
(3) The Governor, or 9[if for any reason, he is unable to attend,] the Deputy Governor authorized by the Governor under the proviso to subsection (3) of section 8 to vote for him, shall preside at meetings of the Central Board, and, in the event of an equality of votes, shall have a second or casting vote.

In case there was a Board Meeting in March-2017, there should have been atleast one press release even if it again did not include Rs 200 information.

In case of Rs 2000, we came to know later that decision was approved in May 2016 Board Meeting. And yes there was a meeting on 19 May 2016 as per the website. But the meeting press release does not mention Rs 2000 which remained a secret.

And as one would expect, on sending the Rs 200 query to RBI it said:

An RBI spokesperson declined to comment.

These RBI Board meetings are becoming way too crucial but are barely discussed. All key decisions are taken in the meeting as we saw in Nov-2016 demonetisation. It is high time the Central Bank is more transparent towards disclosing Board meeting details.

One also does not know the reasons for being so secretive about this denomination business. Most countries have opened up currency printing business inviting suggestions from people on the design, images to be included etc. But we continue to be way too secretive about these matters.

 

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