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Ruling out any adverse impact of the withdrawal of the Rs 2,000 notes on the economy, Reserve Bank governor Shaktikanta Das told the media on Monday that they would decide closer to the September 30 deadline on whether to grant any extension to it.

With the process of exchanging Rs 2,000 notes beginning today, the RBI has asked banks to provide fall facilities to people who go to the banks to get the notes exchanged.

Governance saved the day
Further, in an important meeting with the directors of all public sector banks, the RBI chief discussed various issues related to the crucial topic on matters of governance. Significantly, the government has held governance and regulatory practices in the country’s banking responsible for staying unaffected despite the recent turmoil in the banking industry in the US and Eurozone.

The exercise of exchanging Rs 2,000 notes is supposed to continue till September 30.
According to RBI data, Rs 2,000 notes comprised 10.8% of the total value of the notes in circulation in the country.
On the specific point of extension of deadline, the RBI governor said that they would study on the number of notes returning and then take a call on any extension, which he described as “speculative” at this point. He also said that the deadline was set so that people take the process seriously.

Sensitive to needs
When pointed out that there are many sections of the population such as senior citizens and those who might be overseas for some time, the RBI chief said that they would “sensitive” to the needs of all and would take care not to put anyone in difficulty.

Das’s emphasis on sensitive handling of all hardships come against the backdrop of 2016 the demonetisation, when the government faced extreme flak with the opposition alleging more than 100 people died while standing in queues to deposit notes of Rs 1,000 and 500 that were suddenly banned.

In the interactive meeting between the directors of PSU banks organised by the Department of Supervision of the RBI, and the RBI governor addressed the directors on matters of governance and ethics. Das emphasised to the directors – both wholetime and independent – the expectations from the supervisory perspective.

Besides the governor, deputy governors, and executive directors from the Department of Regulation as well as Supervision also spoke in the meeting.

In the recent times, the governance of banks have been reformed that paved the way for increased autonomy to the board of public sector banks. These steps included independent professional bodies for objective and transparent selection and allotment on the basis of merit and performance. The positions of chairperson and managing director have been separated in PSU banks in 2015. While the non-executive chairman gives overall policy guidance, the managing director manages the affairs of the bank on a daily basis.

Further the the Banks Board Bureau – Financial Services Institutions Bureau in 2022 – was set up in 2016 to appoint whole-time directors in such banks and FIs.