COMMITTEE ON

Rajya Sabha

TWO HUNDRED AND

Notifications issued by Ministry of Finance (Department of Affairs

(Presented to the Rajya Sabha on

REPORT

PARLIAMENT OF INDIA

RAJYA SABHA

COMMITTEE ON SUBORDINATE LEGISLATION

Rajya Sabha Secretariat, New Delhi March, 2017/Chaitra, 1939 (Saka)

TWO HUNDRED AND THIRTY THIRD REPORT

ON

Notifications issued by Ministry of Finance (Department of Economic Affairs ) on Demonetization

Presented to the Rajya Sabha on 10th

April, 2017)

REPORT NO.

233

SUBORDINATE LEGISLATION

REPORT

Economic

)

Website : http://rajyasabha.nic.in

E-Mail: rsc1sub@sansad.nic.in

COMMITTEE ON SUBORDI

TWO HUNDRED AND

Notifications issued by Ministry of Finance (Department of

(Presented to the Rajya Sabha on

Rajya Sabha Secretariat, New Delhi

PARLIAMENT OF INDIA

RAJYA SABHA

COMMITTEE ON SUBORDINATE LEGISLATION

TWO HUNDRED AND THIRTY THIRD REPORT

ON

Notifications issued by Ministry of Finance (Department of Economic Affairs

Presented to the Rajya Sabha on 10th April, 2017)

Rajya Sabha Secretariat, New Delhi

March, 2017/ Chaitra, 1939 (Saka)

Hindi version of this publication is also available

NATE LEGISLATION

REPORT

Economic Affairs) on Demonetization

version of this publication is also available

C O N T E N T S

PAGES

1. COMPOSITION OF THE COMMITTEE

2

3..

INTRODUCTION

ACRONYMS

4.

5.

REPORT ON Notifications issued by Ministry of Finance

(Department of Economic Affairs) on Demonetization

*MINUTES

*To be appended later

COMPOSITION OF THE COMMITTEE

(CONSTITUTED ON THE 15th SEPTEMBER, 2016)

1. Dr. T. Subbarami Reddy Chairman 2. Shri Ali Anwar Ansari 3. Shri Shadi Lal Batra *4. Dr. Kanwar Deep Singh 5. Shri Biswajit Daimary 6. Shri Chunibhai Kanjibhai Gohel 7. Prof. M.V. Rajeev Gowda 8. Shri Vinay Katiyar 9. Shri S. Muthukaruppan 10. Shri Bhaskar Rao Nekkanti 11. Shri K. Parasaran 12. Dr. K. Keshava Rao 13. Shri Palvai Govardhan Reddy 14. Shri Sanjay Seth 15. Shri Shankarbhai N. Vegad _____________________________________________________________

* Nominated to the Committee w.e.f. 8th November, 2016 in place of Prof. Jogen Chowdhury

SECRETARIAT

1. Shri J.G.Negi, Joint Secretary

2. Shri Mahesh Tiwari, Director

3. Shri R.S. Rawat, Joint Director

4. Shri Rakesh Anand, Joint Director

5. Smt. Monica Baa, Deputy Director

INTRODUCTION

1. I, the Chairperson of the Committee on Subordinate Legislation, having been

authorized by the Committee, do hereby present on its behalf, this Two Hundred and Thirty

Third Report of the Committee.

2. The Committee examined the matters that came up while scrutinizing the

Notifications issued by the Ministry of Finance, Department of Economic Affairs on

Demonetization..

3. The observations and recommendations of the Committee are contained in the

Report.

4. The Committee considered and adopted the draft Report in its meeting held on the

28th March, 2017.

DR. T. SUBBARAMI REDDY Chairman

Committee on Subordinate Legislation, Rajya Sabha

NEW DELHI April 10, 2017

ACRONYMS

RBI : Reserve Bank of India

SBN : Specified Bank Notes

AIR : All India Records

FICN : Fake Indian Currency Notes

APMC : Agricultural Produce Market Committee

MSME : Micro, Small and Medium Enterprises

Report on

Notifications issued by Ministry of Finance (Department of Economic Affairs) on Demonetization

The Ministry of Finance (Department of Economic Affairs) issued Notification No S.O. 3407(E) dated

the 8th November, 2016 declaring the denominations of the existing series of the value of five hundred rupees

and one thousand rupees shall cease to be legal tender, on the recommendations of the Central Board of

Directors of the Reserve Bank of India (RBI). On the same date, the Department also issued two other

notifications, namely, S.O. 3408(E) and S.O. 3409(E) dated the 8th November, 2016 specifying certain

exemptions for the convenience of the members of the public in carrying out certain emergent and urgent

transactions using the Specified Bank Notes (SBN); and specifying the denomination of bank notes of the value

of two thousand rupees respectively. The first two notifications have been issued under Section 26(2) of the RBI

Act, 1934 and the last notification has been issued under Section 24(2) of the RBI Act, 1934. These

Notifications however were not laid on the Table of the House although they are statutory in nature.

2. Therefore, the Committee decided to take up Notification No. S.O. 3407(E) dated 8th November, 2016

(Annexure I) for detailed examination and a questionnaire on the same was forwarded to the Ministry of

Finance (Department of Economic Affairs) for their comments/clarifications (Annexure II) . The Committee

also took up for discussion the said Regulations with Reserve Bank of India along with Ministry of Finance

(Department of Economic Affair) and also with different Banks and Financial Institutions during its study visit

to Ahmedabad, Mumbai, Bengaluru and Hyderabad from 5th to 11th January, 2017. Relevant extracts of the

study notes are enclosed at Annexure III, IV, V and VI .

3. While deliberating on the issue the Committee was of the view that the primary function of the

Parliament is the passage of legislation concerned with addressing the needs of the government. However, an

Act of the Parliament creates the framework of a particular law and tends only to contain an outline of the

purpose of the Act. The Parliament by giving authority for legislation to be delegated, enables other persons or

bodies to provide more detail to an Act of Parliament. Parliament thereby, through primary legislation (i.e. an

Act of Parliament), permit others to make law and rules through delegated legislation. Such delegated

legislation which is known as subordinate legislation goes by names like rules, regulations, schemes, bye-laws,

orders, circulars, ordinances, statutes and notifications etc. All such instruments created under the Act in fact,

have same force of law. It is equally important to note that the subordinate legislation so framed must be within

the framework of law which makes the delegation, and such subordinate legislation has to be consistent with the

law under which it is made and cannot go beyond the limits of policy and standards laid down in the law.

Towards this end it is essential to ensure that the subordinate legislation so framed must conform exactly to the

powers granted under the law. So it is imperative to have Parliamentary control over such legislations.

4. Effective Parliamentary control is the defining feature of a subordinate legislation. It is the last frontier

of legislative scrutiny and is integral to the legislature’s role as supreme law making body. The Supreme Court

of India has pronounced this in unequivocal terms in Avinder Singh V. Punjab, AIR 1979 SC 321, “Legislature

cannot efface itself. It cannot delegate the plenary or the essential legislative functions’ even if there be

delegation, parliamentary control over delegated legislation should be a living continuity as a constitutional

necessity”. Further, the Court added: “The legislature is the master of policy and if the delegate is free to switch

policy it may be usurpation of legislative power itself’. In this respect to ensure Parliamentary scrutiny of the

subordinate legislation laying of such instruments before the House is the first step.

5. The U.K. Parliament has also evolved its own system of Parliamentary scrutiny of delegated legislation.

There is no formal procedure in the House of Commons for scrutiny of Bills to see that any delegated power is

necessary and appropriately defined and controlled, but the House of Lords has set up a committee to deal with

these matters in 1994. In U.K. the requirement of laying of statutory instruments on the Table is used

extensively. There are four broad categories of statutory instruments considered as delegated legislations: in the

first category, statutory instruments are made but not laid on the Table of the House and thus not subjected to

debate or voting. Second categories of statutory instruments are laid but not subject to debate or voting hence no

scrutiny. In the third category, statutory instruments are laid in draft form but can be revoked if either House of

Parliament votes against it within 40 days of sitting days. This is called negative procedure. In the fourth

category, statutory instruments are laid on the Table of the House and cannot come into force unless agreed to

by both Houses of Parliament.

6. The Committee on Subordinate Legislation since its inception has been grappling with the issue of

ensuring that subordinate legislation framed by the Executive comes before the Parliament for its information

and scrutiny. In this respect the following efforts steps taken by the Committee may be enumerated:

(i) The Committee on Subordinate Legislation, Rajya Sabha has in its various reports recommended the

need for laying of “Orders” on the Table of the House. In its 10th Report presented to the House on 24th May,

1971, the Committee, after extensive discussions with the Ministry of Law & Justice, recommended a standard

laying formula, as given below, which was to be incorporated in all new Acts as well as existing Acts as and

when the Bills to amend them are brought before the Parliament.

"Every rule made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in

making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule."

(Paras 57 of the 10th Report) (presented on 24.5.1971)

(ii) Thereafter, the Parliament adopted the Delegated Legislation Provisions (Amendment) Act, 1983 vide

which certain Acts were amended to implement the recommendations of the Committees on Subordinate

Legislation regarding publication and laying of rules and other delegated legislation.

(iii) The Committee in its 75th Report presented to the House on the 29th March, 1988, recommended that,

“the Committee agrees with the view of the Committee on Subordinate Legislation, Lok Sabha (Seventh Lok

Sabha) expressed in its 20th Report, that laying on the Table of all ‘Orders’ in pursuance of powers delegated

by Parliament is very significant, as it affords an opportunity to Members of Parliament if they so desire to

move any amendment or modification to such ‘Order’; including a Motion for their annulment.” The term

“Orders” refers to rule, regulations, bye-law, scheme or other statutory instrument as per Rule 209 of the Rules

of Procedure and Conduct of Business in the Council of States.

(iv) The Committee in its 82nd Report presented to the House on the 1st June, 1990 recommended that all

rules/regulations framed under Article 309 of the Constitution should be laid on the Table of the House even

though the said Article does not contain laying provision. The Committee also recommended that in order to

maintain a uniform practice all the Rules made under delegated authority whether under various Acts of

Parliament or Article 309 of the Constitution should be laid before Parliament. In case, however, Government

feels that the non-existence of the laying provision in Article 309 is the reason for not laying the Rules made

thereunder, the Committee recommends that Article 309 of the Constitution be suitably amended, so as to

ensure that all the Rules made thereunder are laid before Parliament.

(v) The need and importance of laying of notification was also highlighted by the Legislative Department,

Ministry of Law & Justice while giving its opinion on the right of a Member to move a Motion for Annulment

of the Delimitation of the Council Constituencies (Tamil Nadu) Order, 2010 laid under the Tamil Nadu

Legislative Council Act, 2010 wherein they stated that:

“the Legislative Department is of the considered view that the aforesaid Order was not laid before the Parliament under statutory provision. The document was placed before the Parliament purely for its information and the same should not be subjected to a motion of the House for its annulment or modification. The intention was to make available to the public and Parliament the important document as a public document as otherwise such important document may not become a public document within the realm of the public domain and with the knowledge of the House for further use of the House.”

(vi) The Committee in its 131st Report presented to the House on the 15th December, 2000 made some

observations on the time-frame within which any notification/Order should be laid on the Table of the House

and recommended that Orders required to be laid before the House should be laid (i) if the House is not in

Session, during the Session immediately following the date of publication of the Order in the Official Gazette,

and (ii) if the House is in Session, on the date of publication of the Order, during its continuance and in case the

time lag between the date of publication is less than 15 clear days, before the expiry of the Session immediately

following the said Session.

(vii) In its 228th Report presented to the House on the 11th August, 2016, the Committee recommended that

Circulars, Master Circulars, Master Directions and other instruments issued by the Reserve Bank of India

coming under the definition of ‘subordinate legislation’ should be laid before both the Houses of the Parliament.

The Committee had recommended as follows:

“125. The Committee based upon its observations and taking into consideration the various judgments of the Courts recommends that the Ministry of Finance should ensure that the Circulars, Master Circulars, Master Directions and other instruments issued by the Reserve Bank of India under the Banking Regulation Act, 1949 and other Acts passed by Parliament should be published in the Gazette and laid before both the Houses of the Parliament as these instruments come under the comprehensive definition of “Subordinate Legislation” and are statutory in nature.

126. The Committee also observes that Section 52(5) of the Banking Regulation Act, 1949 provides for laying of all rules issued under the Act before each House of Parliament and accordingly the Committee impresses upon the Ministry of Finance to ensure that the Circulars, Master Circulars, Master Directions and other instruments issued by the Reserve Bank of India coming under the definition of ‘subordinate legislation’ should be laid before both the Houses of the Parliament.

127. RBI should ensure that these Circulars, Master Circulars, Master Directions and other instruments issued by it under the Banking Regulation Act, 1949 and other Acts passed by Parliament should have simplicity, precision and clarity so as to be legible to the concerned stakeholders and the common man. RBI should also ensure that the nomenclature of the instruments issued by it should be specified so as to differentiate between the legal and statutory instruments and other administrative orders and instruments”.

7. The Committee reiterates its earlier recommendation on laying of all the orders, notifications etc.

issued under the statutes passed by Parliament. Laying of statutory orders is the first step towards

exercising Parliamentary control over delegated legislation. Laying of statutory instruments on the Table

of the House gives member an opportunity to move a Motion of Modification or Annulment. The

Committee on earlier occasion in its 10th Report has suggested to incorporate laying formula in all

existing statutes wherever there is scope of framing of delegated legislation so that it becomes mandatory

on the part of all Ministries to lay all the notifications under the statute. The Committee also recommends

the Ministry of Finance should bring suitable amendments in RBI Act, 1934 to make laying of statutory

instruments under it mandatory.

8. During the discussion the Committee sought to know from the Ministry whether the said Notification,

i.e. S.O. 3407 (E) dated the 8th November, 2016 was laid before the Parliament and if not, the reasons therefore.

The Ministry, in response, stated that the said Notification has not been laid before the Parliament as there was

no provision in the RBI Act, 1934 for statutory notifications being laid in the Parliament. They are issued in the

Gazette.

9. The Committee discussed this issue in detail and took into consideration the fact that this notification

was framed under a Statute and was statutory in nature. Hence it should have been brought before the

Parliament for its knowledge and scrutiny. The Committee, took into consideration its earlier

recommendations as contained in its various Reports mentioned earlier and was of the considered view

that the notification issued by the Ministry of Finance (Department of Economic Affairs) should have

been laid before the Parliament in the Winter Session of 2016 itself. The Committee, accordingly,

impresses upon the Ministry to take note of the recommendations of the Committee enumerated earlier

and, in future, to ensure that the Committee’s recommendations are adhered to both in letter and spirit.

10. The Committee observed that the Notification S.O. 3407(E) dated 8th November, 2016 states that the

fake currency of the specified bank notes have largely been in circulation and is causing adverse effect to the

economy of the country at large. In this reference the Committee sought to know the estimated total value of

the fake currency in the economy of the country and the steps proposed to be taken to check the fake currency

notes from coming into the system. The Ministry informed that as per the study conducted by the Indian

Statistical Institute, the stated value of Fake Indian Currency Notes (FICN) in circulation was Rs 400 crore. In

the year 2014 the seized/recovered value of FICN was Rs 40.58 crore, in the year 2015 it was Rs 43.83 crore

and in the year 2016 upto 30.09.2016 the fake Indian currency notes seized/recovered was Rs 27.79 crore.

11. The Committee took note of the facts stated by the Ministry. The Committee, accepts that FICN is a

major issue of concern for the economy and needs to be addressed with all seriousness. The Committee

hopes that the Ministry would now take all measures possible in coordination with all the concerned

agencies to ensure that counterfeit currency of the new series of 500 and 2000 Rupee Notes issued by RBI

do not enter into the Indian economy and cause a threat to our economy again. At the same time,

Committee also takes note of reports that counterfeit notes of the New series of notes have already

entered the economy and expects that the Ministry would assess the veracity of these reports

immediately on a priority and take corrective measures at the earliest so that this menace is curbed

effectively and financial integrity of our system is well maintained.

12. The Committee observed that the earlier demonetization in the year 1978 was done by way of an Act i.e.

the High Denominations Bank Notes (Demonetization) Act, 1978 whereas the present demonetization was

effected by way of a Gazette Notification. In this respect, the Committees sought clarification on the major

differences between the two and the reason why the present demonetization was done by way of a notification.

The Ministry stated that in 1978 the 1000, 5000 and 10,000 denominations were demonetized, i.e. after

demonetization, these denominations did not exist at all. Whereas, in 2016, bank notes of denominations 500

and 1000 of particular series and existing till a particular date, have been declared not to have legal character.

The denominations as such had not been cancelled.

13. The Committee further observed that the process of demonetization has virtually affected every sector

of the economy. However, sectors like the Micro, Small and Medium Enterprises (MSME), agriculture, textiles

etc which are labour intensive have been worst affected due loss of livelihood as most of the wages were paid in

cash. Accordingly, the Committee sought to know from the Ministry whether it had taken into consideration

the impact demonetization would have on these sectors and what relief measures it had proposed to help revive

the sectors which had been negatively affected by it.

14. In response, the Ministry informed about the steps taken in different sectors of the economy. In the

Agriculture sector, to resolve the issues faced by the farmers, they were allowed to purchase seeds from

various Government agencies on tendering Specified Bank Notes (SBN). To facilitate their selling in markets,

withdrawal of Rs. 50,000/- per week was allowed to the traders registered with the Agricultural Produce Market

Committee (APMC). Also, to facilitate small businesses and wage-earners, withdrawal of Rs. 50,000/- per

week was allowed from a current account. To address the concerns of Micro, Small and Medium Enterprises

(MSME) sector action have been taken by RBI/ DFS for the benefit of MSME. Additional 90 days have been

allowed for repayment of loan to those establishments where running working capital accounts (OD/CC) / crop

loans with any bank the sanctioned limit whereof Rs.1 crore or less and to the term loan of Rs.1 crore or less for

business purposes, including agriculture loan. The dispensation applies to dues payable between 1st November

to 31st December, 2016.

15. The Committee was also informed that RBI has advised the banks for additional working capital limit to

MSMEs for meeting temporary increase in working capital (WC) requirement arising mainly due to unforeseen

/ seasonal increase in demand for products produced by them. On its part, Department of Financial Services

has advised all Public Sector Banks (PSBs) (i) not to cap working capital limit for MSMEs at 20% of estimated

annual turnover and to treat 20% limit as the minimum and (ii) WC limits of MSMEs to be increased

appropriately to facilitate their transit to cashless / digital mode. Further, action has been taken for factoring in

cash deposits made by MSMEs in the recent period for determining working capital limits.

16. The Committee took note of the steps taken by the Ministry to mitigate the effects of demonetization on

the rural population with specific reference small farmers, traders, artisans etc. the Committee impresses upon

the Ministry to ensure that the steps taken by them reach the intended recipients and the rural economy of the

country recovers at the earliest.

17. The Committee also highlighted a number of instances where it was found that the Bank employees

were involved in the act of depositing the money in the bank accounts especially the non-operational Jan-Dhan

accounts in rural areas. It sought to know from the Ministry whether they had taken any assessment of the

situation, steps taken to check the veracity of these reports and action proposed to be taken in such cases, if

found to be true.

18. In response the Ministry stated that the Income-Tax Department has adopted a multi-pronged approach

to detect and seize undisclosed assets and take other enforcement measures. Since 9th November, 2016 more

than 980 intrusive actions (searches/surveys/seizures) have taken place. These actions have led to seizure of

valuables of about Rs 550 crore which include cash of Rs 458 crore. New currency of more than 105 crore is

part of the cash seizure. Besides, based upon specific intelligence, more than 5000 verification notices have

been issued under relevant provisions of the Income-Tax Act. The total undisclosed income detected in these

actions till 28th December, 2016 is more than Rs 4172 crore.

19. The Committee observed that even in developed countries like in Europe a majority of the transactions

are in cash. In this respect they sought details of the efforts made by the Ministry/Banks/Financial Institutions to

promote e-transactions. The Ministry informed that Government had advised all Ministries/ Departments to

remove convenience charges. Also, the Controller general of accounts (CGA) had issued instructions advising

all Government agencies to make necessary budget provision to absorb MDR on payments made to

Government.

20. The Ministry further informed that 19 short-term and 4 medium term measures, to be implemented

within 1 year and 2 years respectively, have been approved by the Cabinet in February, 2015. The Department

of Economic Affairs had constituted a Committee under the Chairmanship of Shri Rattan P. Wattal, Principal

Advisor, NITI Ayog and former Finance Secretary to implement the medium term measures. The Committee

submitted a report which has since been placed on the website of the Ministry of Finance to obtain the

comments of the stakeholders.

21. Expressing the concerns of the public at large on the restrictions on withdrawal of amount from banks

across the country, the Committee wanted to know till when this restriction on withdrawal would continue and

whether any timeframe had been set for such restrictions. The Ministry stated that steady supply of new notes

was continuing and will be carried out till sufficient money is in circulation. Restrictions on withdrawal will be

removed based on the assessment made from time to time.

22. The Committee was not satisfied with the comment of the Ministry and was anguished to note that such

a major exercise had been carried out without any adequate survey or research on the needs of the different

sectors of the economy. The restrictions on withdrawal of cash had been made uniform for all the customers not

taking into consideration the needs and requirements of different sections of society as well as business

establishments. For example there were number of establishments which need more than 10 to 15 lakhs cash to

conduct their transactions, such establishments along with many other sectors like the Tea Gardens and

construction sectors had literally collapsed and it would take many years for them to recover. The Committee

was of the view that the Ministry/RBI should have carried out a study based on last three years cash withdrawal

to fix the cash withdrawal limit in a more pragmatic and realistic manner. Keeping in view the fact that the

economy is now slowly recovering from the effects of demonetization the Committee is of the view that

the Ministry and the Reserve Bank of India should hold discussions with the affected parties and provide

the support as and where required so that these sectors which virtually collapsed during the

demonetization process are recovered fully in due course.

23. The Committee observes that India is the second largest producer and consumer of currency

notes. Circulation of bank notes has increased from 64,58 billion pieces to 90.27 billion pieces over the

last five years. The main object behind cancelling the legal tender character of the specified bank notes

on the 8th November, 2016 was to eliminate black money and to curb the infusion and circulation of fake

Indian currency notes. It was an effort to combat corruption, tax evasion and counterfeiting and

eradicate black money. However, the Committee realizes that inevitably, it is the low-income and rural

households who have been hardest hit by the currency reform. Demonetization has weighed heavily on

the country’s manufacturing sector. Though the Ministry took steps to mitigate the effects, it cannot be

ignored that it created significant disruption throughout the economy and threatened economic output.

24. The Committee appreciates the Government’s efforts to move towards cashless economy and steps

taken to encourage public to adopt digital transaction in every sphere of life. However, Committee feels

that though Electronic payments systems are fast, convenient and easy, but India’s economy relies

predominantly on cash, therefore the effects of demonetization were greater than anticipated. Our

economy is heavily dependent on cash as only less than half of the population uses banking system for

monetary transactions. As a result, demonetization has hit trade and level of consumption very hard.

25. The Committee acknowledges that corruption is a problem but in the process honest,

hardworking and tax paying citizens of India were made to suffer. The Committee agrees that corruption

is a major cause for the persistence of poverty and the growth of corruption in India due to the maze of

regulations and the thickets of red tapism. In Committee’s view solution lies in simplification,

rationalization and reduction in taxes; cutting regulations and curtailing officials’ discretionary powers;

eliminating loopholes and widening the tax net along with efficient implementation. And for efficient

implementation of all this, discussion on the issues at hand with people with the requisite expertise is a

must rather than attack any criticism as somehow anti-national or pro-corruption.

26. The Committee also feels that tackling black money would require immense political will and

legal/administrative/diplomatic heavy-lifting. Therefore, the Committee hopes that the Government

would meticulously to follow up strongly on its demonetization move.

27. The Committee is hopeful that the Ministry will take of note of the observations and

recommendations of the Committee and work on them expeditiously under intimation to it. The

Committee is also hopeful that the Ministry of Finance (Department of Economic Affairs) in coordination

with other concerned agencies will take proactive measures to revive the sectors that are still not able to

recover from the adverse effects of demonetization and stresses upon the Ministry to ensure that the

menace of fake currency does not enter the Indian economy.

Annexure II

REPLIES TO THE QUESTIONNAIRE ON THE NOTIFICATIONS ISSUED ON DEMONETIZATION AND

PROBLEMS/ GRIEVANCES OF THE CUSTOMERS REGARDING COLLECTION AND DISBURSEMENTR

OF CASH BY BANKS

Q. No. Question Reply

1 The Notification S.O. 3407(E) dated 8th November, 2016 was issued by the Department of Economic Affairs, Ministry of finance. In this respect inform whether this notification was laid before the Parliament. If no, the reasons thereof.

The Notification S. O. 3407 (E) have not been placed before the Parliament. The processing of the Specified Bank Notes (SBN) i.e. Rs.500 and Rs. 1000 bank notes which started on 8th November, 2016 continued till 30.12.2016. There is no provision in the RBI Act, 1934 for statutory notifications being laid in the Parliament. They are issued in the Gazette.

2 The Notification S.O. 3407(E) dated 8th November, 2016 states that the fake currency notes have largely been in circulation and is causing adverse effect to the economy of the country. In this reference, what is the estimated total value of the fake currency in the economy of the country and what other steps are proposed to be taken to check the fake currency notes from coming into the system again.

As per a study conducted by the Indian Statistical Institute, the stated value of Fake Indian Currency Notes (FICN) in circulation is of Rs. 400 Crore. The details of seizures and recovery are as follow:

Year seized/recovered (pcs)

seized/recovered (value) in Rupees Cr.

2014 801528 40.58 2015 886058 43.83 2016* 574176 27.79

* upto 30.9.2016

3 The said Notification states that the Central Govt after due consideration has decided to implement the recommendations of the Central Board of Directors of the Reserve Bank of India. In this respect inform as to when did the Central Board of Directors of the Reserve Bank of India recommended to the Central Govt for demonetization. What other recommendations were made by the Board and what were the recommendations that were not accepted and the reasons for the same.

The Reserve Bank of India conveyed on 8th November of their recommendations for withdrawing the legal tender character of the then existing Rs.500 ad Rs. 1000 bank notes, i.e., Specified Bank Notes (SBN). No other recommendation was conveyed along with the above.

4 The earlier demonetization in the year 1978 was done vide a Act i.e. the High Denomination Bank Notes (Demonetization) Act, 1978 whereas the present demonetization has been effected by way of Gazette Notification. In this respect what are the major differences between the two and why the present demonetization was done by way of a notification.

The major difference between the demonetization carried out in 1978 and cancelling legal tender character of R. 500/- and Rs. 2000/- denomination banknotes existing on 8th November, 2016 are as below: In 1978 - 1000, 5000 and 10,000 denominations were demonetized, i.e., after demonetization, these denominations did not exist at all. Whereas, in 2016, bank notes of denominations 500 and 1000 of particular series and existing till a particular date have been declared not to have legal tender character. The denominations as such had not been cancelled

5 The process of demonetization has effected virtually every sector of the economy however sector like the MSME, agriculture, textiles etc which

Agriculture To resolve the issues faced by the farmers they were allowed to purchase seeds from various Government agencies on tendering SBN. To facilitate their selling in

are labour intensive have been the worst affected due to the fact that it has resulted in loss of livelihood of the labour as most of the wages were paid in cash. In this respect, did the Ministry take into consideration the impact the process of demonetization would have of these sectors and what relief measures are proposed to help revive the sectors which has been negatively affected by it.

markets, withdrawal of Rs. 50,000/- per week was allowed to the traders registered with the Agricultural Produce Market Committee (APMC). To facilitate small businesses and wage-earners, withdrawal of Rs. 50,000/- per week was allowed from a current account. MSME Following actions have been taken by RBI/ DFS for the benefit of MSME Additional 90 days have been allowed for repayment of loan to those establishments where running working capital accounts (OD/CC) / crop loans with any bank the sanctioned limit whereof Rs.1 crore or less and to the term loan of Rs.1 crore or less for business purposes, including agriculture loanThe dispensation applies to dues payable between 1st November to 31st December, 2016 RBI has advised the banks for additional working capital limit to MSMEs for meeting temporary increase in working capital requirement arising mainly due to unforeseen / seasonal increase in demand for products produced by them. DFS has advised all PSBs the following: i. Not to cap working capital limit for MSMEs at 20%

of estimated annual turnover and to treat 20% limit as the minimum

ii. WC limits of MSMEs to be increased appropriately to facilitate their transit to cashless / digital mode

iii. Factoring in cash deposits made by MSMEs in the recent period for determining working capital limits.

6 RBI has issued a number of circulars since 8lh November, 2016 after assessing the effect of demonetization. It has however at times resulted in confusion among the people as to what was the exact rule position at any given time. In this respect what efforts were made by the Ministry and RBI to ensure that the customers in rural areas did not face problems at the Banks.

RBI has issued Press Release from time to time to clarify any confusion created in the minds of the members of public. Banks have been advised for immediate implementation of any advisory issued by RBI.

7 Reports have appeared that number of instances have come where it has been found that the Bank employees were involved in depositing the money in the bank accounts especially the non-operational Jan-Dhan accounts in rural areas. Has the Ministry taken any assessment of the situation and steps to check the veracity of these reports and what action is proposed to be taken in such cases, if found to be true.

The Income-tax Department (ITD) has adopted a multi-pronged approach to detect and seize undisclosed assets and take other enforcement measures. Since 9 November, 2016 more than 980 intrusive actions (searches/surveys/seizures) have been taken. These actions have led to seizure of valuables of about Rs. 550 crore which includes cash of Rs. 458 crore. New currency of more than Rs. 105 crore is part of the cash seizure. Besides, based upon specific intelligence, more than 5000 verification notices have been issued under relevant provisions of the Income-tax Act. The total

undisclosed income detected in these actions till 28th December 2016 is more than Rs. 4172 crore. Further enquiries in the matters are in progress.

8 What are the security features that have been incorporated in the new series of 500/- and 2000/- rupee notes that have released by the RBI. Is it a fact that the paper used for printing these notes is imported and if so. what efforts are been made for its indigenous production.

Security Features of Rs.500 and Rs.2000 banknotes are at Annexure-II The actions taken to print Indian bank notes on indigenous paper has been detailed in Annexure-I

9 Efforts are being made to promote cashless transactions. However, it is seen that convenience charges imposed by different portals tend to be substantial. In this respect what efforts been made to reduce transaction charges to promote more cashless transactions?

Government has advised all the Ministries/ Departments to remove convenience charges. Also Controller general of Accounts (CGA) has issued instruction, vide OM No. 1(1)/2006/ECS/TA/669 dated 14.12.2016, advising all the Government agencies to make necessary budget provision to absorb MDR on payments made to Govt.

10 It is observed that even in developed countries like in Europe a majority of the transactions arc in cash. In this respect what efforts have been made by the Ministry/ Banks/ Financial Institutions to promote e-tranactions.

19 short term (to be implemented within 1 year) and 4 medium term (to be implemented within 2 years) measures have been approved by the Cabinet in February, 2015. Actions taken on short term measures is at Annexure-3 To implement the medium term measures, the Department of Economic Affairs had constituted a Committee under the Chairmanship of ShriRattan P. Watal, Principal Advisor, NITI Ayog and Former Finance Secretary. They have submitted the Report, which has been placed on the Ministry of Finance website to obtain comments from stakeholders.

11 Apprehensions have been raised that as the government promotes cashless transactions companies providing e-payment platform with majority holding by foreign investors would benefit. In this respect what are the efforts made by the Ministry to ensure that promotion of cashless transactions don't benefit such companies.

Government has taken action to launch e-payment platforms and has created BHIM App, based on UPI, and has also developed USSD-based payment option. The details may be seen at Annexure-4.

12 There are Reports that certain banks have been involved in money laundering. If so. what are the steps taken by the Ministry/RBI against such Banks and steps taken to prevent such activities.

As in Question-7. DFS will report separately on the actions taken by them and the RBI.

13 Till now Banks had been insisting on KYC (Know your customer) requirements, however keeping in view' the fact that reports have surfaced showing the involvement of bank officials in depositing old notes in different accounts and exchanging notes. What measures have been

proposed by the RBI/Banks against such officials.

14 Demonetization has raised the liquidity of the Banks. In this respect what are the steps contemplated by RBI and the Bank to ensure that the liquidity of the Banks is utilized in considerate manner.

Banks have already reduced the interest rates of lending due to the increased liquidity.

15 What has been the approximate cost of this exercise of replacing the currency with a new series of notes? By when Govt/RBI proposes to come out with new' series of Rs 1000/-.

The replacement of the notes is still in progress and the costs will be available after the same is completed. The decision on introducing the Rs. 1000 note will be taken in due course

16 It has been provided that after 30Ih December, 2016 the old currency notes of 500/- and 1000/- value can be exchanged only at RBI offices subject to certain conditions. In this respect what are the conditions that will be valid for exchange at RBI offices.

As per the Ordinance and RBI Notifications the conditions for depositing SBN at RBI offices are placed at Annexure-5

17 There is apprehension in the public that in near future Rs 2000/- currency will also be demonetized. In this regard what are the comments of RBI/ Ministry?

No such recommendation has been made by RBI

18 There is restrictions is withdrawn of amount from the Banks across the country. How long this restriction on withdrawal will continue? Whether there is any time- frame for such restriction? Please comment.

Steady supply of new notes is continuing and will be carried out till sufficient money in to circulation. Restriction on withdrawal will be removed based on the assessment made from time to time.

Annexure-1

Measures to Control Circulation of FICN and Steps for Indigenous Production

i. RBI issued instructions on August 26, 2015 to all banks that banknotes tendered over the counter / received directly at the back office / currency chest through bulk tenders should be examined for authenticity through machines.

ii. To enhance the capabilities of BhartiyaReserve Bank Note Mudran Private Limited (BRBNMPL), a state of the art laboratory and a design studio for the purpose of R & D has been created by BRBNMPL. RBI has proposed to set up digital depository of forensic reports which would be helpful in facilitating sharing of data on FICN seized in Bangladesh.

iii. Security Printing and Minting Corporation of India Limited (SPMCIL) and BRBNMPL will conduct training programme for Bangladeshi and Indian Police officers to build/ develop capacity in India and in Bangladesh for tackling FICN menace free of cost. RBI will provide necessary faculty support for the training.

iv. SPMCIL and BRBNMPL have installed stand-alone PCs, with the stipulated specifications with broad band connection within a week in all the laboratories under them to have secured net-working of Currency Forensic Labs.

v. RBI advised Ministry of Home Affairs to install note sorting machines at airport and international borders cross over points. DFS has been requested to install the machines.

vi. Indigenous production of note-printing materials has been taken up on priority basis. One new paper-producing line of capacity of 6000 MT has been installed at Security Paper Mill (SPM), Hoshangabad, while a Joint Venture of SPMCIL and BRBNMPL, viz., Bank Note Paper Mill India Private Limited (BNPMIPL) has been set up, where two new lines of total capacity of 12000 MT have been installed. All these lines are producing paper.

vii. SPMCIL has augmented its ink-producing capacity to 800 MT per year, which suffices their requirement of ink of those specifications. The capacity is being further enhanced to 1500 MT.

viii. BRBNMPL is setting up an ink-manufacturing facility for their captive use of capacity of 1500 MT per year.

ix. RBI takes up public awareness programmes about FICN x. The Ministry of Finance, Ministry of Home Affairs, RBI, Security and Intelligence Agencies

of the Centre and States etc., are working in tandem to thwart the illegal activities related to FICNs. An FICN Coordination (FCORD) Group has been formed in the MHA to share the intelligence/ information amongst different security agencies of States/Centre to counter the menace of circulation of fake currency notes in the country. It also coordinates with different security agencies to affect more seizures. The issue has also been raised in international multilateral fora constantly. RBI has also initiated several measures for generating public awareness, conducting training programmes for employees/ officers of banks and streamlining the process of reporting and detection of counterfeit notes.

Annexure-2

Security Features of 500-Rupee Notes

1) M- feature 2) Bicolour UV fibre 3) See through register in denomination numerals 4) Latent image of the denomination numeral 5) Colour-changing windowed security thread with RBI/ Bharat 6) Portrait ad electrotype watermark 7) Number panel with exploding font 8) Denomination in numeral with Rupee symbol in colour changing ink 9) Intaglio printing of Mahatma Gandhi Portrait 10) 5 Bleed lines for visually impaired persons;

Security Features of 2000-Rupee Notes

1) M- feature 2) Bicolour UV fibre 3) See through register in denomination numerals 4) Latent image of the denomination numeral 5) Micro letters RBI and 2000 6) Colour-changing windowed security thread with RBI/ Bharat/ 2000 7) Mahatma Gandhi portrait and electrotype (2000) watermark 8) Number panel with exploding font 9) Denomination in numeral with Rupee symbol in colour changing ink

10) Horizontal rectangle with rupee symbol and 2000 in raised print 11) 7 Bleed lines for visually impaired persons

Annexure-3

i. Government Ministries/ Departments have been advised top remove

Convenience charges and also to create budget head to absorb merchant Discount Rate.

ii. To create adequate Acceptance Infrastructure, it has been suggested to mandate

banks to create separate fund backed by MDR receipts that is utilized by acquiring banks to set up necessary infrastructure. RBI has been suggested to deploy the Financial Inclusion Fund for the purpose of widening the acceptance infrastructure. And to make the existing infrastructure Aadhaar-enabled.

iii. Ministry of Road Transport& Highways has enabled RFID-based Toll payment

cards, in collaboration with NPCI. iv. Ministry of Urban Development is developing in collaboration with NPCI, a open-

loop for multi-purpose transportation card.

v. Department of Revenue has enhanced the limit for requirement for banks to report card/ digital transactions of more than Rs 2 lakhs a year made by a credit cardholder to the tax authorities.

vi. Department of Financial Services / RBI has allowed enhanced Cashout, of a

specified amount, at Point of Sale (PoS) Terminals through Cards/ Digital means. vii. Department of Telecommunications has rationalized USSD Charges. viii. RBI has increased the limitsfor e-wallets. ix. All ministries have been directed to encourage employees to use debit/credit

card for payments.

x. The Government on 19 December 2016 has announced benefit of lower rate of Income Tax on digital turnover for small businesses up to a turnover of Rs. 2 crore.

xi. DigiDhanAbhiyaanhas been undertaken to get people and merchant onboard

digital platform through CSC SPV of the Ministry. CSC SPV has around 1.75 lkh Common Service Centres run by Village level entrepreneurs throughout the country. 1 crore people and 25 lakh merchants across 476 district and 2120 blocks have been targeted under this campaign.

xii. DigiShaala – a education channel has been initiated from December 9 to educate people regarding various facets of digital payments. Channel is available on DD Free Dish which caters to nearly 2-2.5 crore rural households.

xiii. DigiDhanMela was organized in National Stadium Delhi on Dec 17 xiv. CashlessIndia.gov.in has been launched on Dec 9 to provide official authentic

information regarding various digital payment systems. xv. National Institute of Electronics and IT (NIELIT) has been conducting workshops

and reaching out to its student community – approx. 3 lakh students/merchants have been promoting digital payments.

Annexure-4 Indigenous products for adopting cashless mode of transactions are as follow: RuPay- Domestic Card RuPay is the domestic card scheme of India. Started in 2012, the RuPay scheme have card base of over 300 million debit cards. The card is accepted on all the ATMs, Point of Sale (PoS) and online ecommerce websites in an interoperable manner. RuPay comes with a social benefit feature, insurance coverage of Rs. 1, 00,000 ($ 1500) accidental death/ permanent disability, at no cost to the cardholder. Aadhaar Enabled Payment System (AEPS) AEPS Platform encourages financial inclusion using the Aadhaar (National ID of India) number as the central key. It is used for the electronic transfer of benefits and subsidies given by the government using Aadhaar No. The services leverage advanced technology and telecommunication infrastructure to reach out to the common man. AEPS is a platform that facilitates financial inclusion by allowing transaction at Point of Sale (POS), using an Aadhaar. Immediate Payment System (IMPS) IMPS is real-time, anywhere-anytime remittance service. It is a channel agnostic platform that caters to processing of Person to Person (P2P) and Person to Merchant (P2M) payments that are initiated from a bank branch, mobile device, internet, or from ATM channels. Currently more than 185 Banks & Financial Institutions are offering IMPS facility to their customers. National Unified USSD Platform (NUUP) NUPP is a USSD based mobile banking platform that makes banking services accessible to all the bank account holders even using feature (non-smart) mobile phones. The service brings the banks &telcos together, making it an interoperable platform. . Key services are currently being offered by 51 Banks, Services includes Balance Enquiry, Mini Statement, Fund Transfer, MPIN Management etc. Unified Payments Interface (UPI) UPI is a new generation product leveraging on the proliferation of smart phones in the country. It is estimated that there are appx. 250 Million smart phone holders in India. A Bank in its capacity of a Payment Service Provider (PSP) can provide for a Mobile App to the customers for their transaction needs. The customers opting to use the Mobile App interface of a Bank could either be banking with the same bank or may be holding accounts with another bank. A customer could send money (Push) or initiate a Collect request from another customer (Pull). Thus, the payments can be both Sender & Payee initiated. The UPI framework provides for a single click 2-factor authentication where the device becomes the first factor of authentication for all subsequent financial transactions & the PIN or Bio-metrics is used as the second factor of authentication.

BHIM (Bharat Interface for Money) Bharat Interface for Money is an app that lets you make easy and quick payment transactions using UPI. It is easier than Wallets. One can easily make direct bank to bank payments and instantly collect money using just Mobile number or Payment address. Bharat Interface for Money app is currently available on Android. The same will be made operable on other platforms too.

Annexure-5

The following persons holding specified bank notes on or before the 8th day of November, 2016 can tender within the grace period with declarations or statements, as specified by the Reserve Bank.

2. Among Indian citizens, two categories of individuals, holding SBNs, can avail of the facility, viz.,

i. Resident Indians who were abroad during the period from November 9 to December 30, 2016, and

ii. Non Resident Indians(NRIs) who were not in India during the period from November 9 to December 30, 2016

This facility will not be available for Indian citizens resident in Nepal, Bhutan, Pakistan and Bangladesh. 3. The facility can be availed only by Indian citizens in their individual capacity and only on one occasion during the period. No third party tender is permissible under the facility. There will be no monetary limit for submission of SBNs in the tender. This facility will be made available through five of the offices of the Reserve Bank viz. the Reserve Bank offices at Mumbai, New Delhi, Chennai, Kolkata, and Nagpur.

4. Only those NRIs who were not present in India during the period from November 9, 2016 to December 30, 2016 will be eligible to avail this facility once during the tenure of the facility. Tenders will be restricted to a maximum of ₹ 25,000 per individual depending on when the notes were taken out of India as per relevant FEMA rules. 5. The facility will remain open for residents from January 2, 2017 to March 31, 2017 and for NRIs from January 2, 2017 to June 30, 2017. 6. Any person, aggrieved by the refusal of the Reserve Bank to credit the value of the notes may make a representation to the Central Board of the Reserve Bank within fourteen days of the communication of such refusal to him.

Annexure III

STUDY NOTE OF THE COMMITTEE’S DISCUSSION AT AHMEDABAD ON 05.01.2017

The Committee met at 10.00 A.M. on the 5th January, 2017 at Ahmedabad to discuss

various rules/regulations, viz. (i) Environment (Protection) Rules, 1986; (ii) Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 and Plastic Waste Management Rules, 2016; (iii) Reserve Bank of India Scheme for Sustainable Restructuring of Stressed Assets; problems faced by Banks sue to rising NPA of different categories; RBI Master Circular on Cash Reserve Ratio and Statutory Liquidity Ratio; and Notifications issued on Demonetization and problems/grievances of customers regarding collection and disbursement of cash by Banks due to demonetization in Gujarat; and (iv) Central Electricity Regulatory Commission (Power Market) Regulations, 2010. The following Members, officers of the Committee and representatives of Central Government, State Government and different organizations were present during the meeting:- Present

1. Dr.T. Subbarami Reddy, Chairman Members

2. Shri Ali Anwar Ansari 3. Shri Biswajit Daimary 4. Shri S. Muthukaruppan 5. Shri Palvai Govardhan Reddy 6. Shri Shankarbhai N. Vegad

Rajya Sabha Secretariat

1. Shri Mahesh Tiwari, Director 2. Shri R.S. Rawat, Joint Director 3. Shri Mohit Misra, Committee Officer

Representatives of Central Government, State Government and different organizations

(i) Environment (Protection) Rules, 1986; Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 and Plastic Waste Management Rules, 2016

1. Dr. J.N. Singh, Chief Secretary, Government of Gujarat 2. Shri Sujit Gulati, Additional Chief Secretary, Energy & Petrochemicals

Department, Government of Gujarat 3. Shri Puranchand Parmar, Additional Chief Secretary, Urban Development

Department, Government of Gujarat 4. Shri Sanjeev Kumar, Secretary (Exports), Government of Gujarat

5. Shri Biswanath Sinha, Joint Secretary, Ministry of Environment, Forest & Climate Change

6. Shri Hardik Shah, Member Secretary, Gujarat Pollution Control Board 7. Shri B. Vinod Babu, Additional Director, CPCB 8. Shri S. Ramesh, Director, Bharat Petroleum Corporation Limited 9. Shri Vinay K. Misra, Executive Director, Indian Oil Corporation Limited 10. Shri B.S. Canth, Director, Indian Oil Corporation Limited 11. Shri Vinod S Shenoy, Director, Hindustan Petroleum Corporation Limited 12. Shri A.K. Dwivedi, Director, ONGC 13. Dr. Ashutosh Karnatak, Director, GAIL India Limited 14. Shri P.K. Sharma, Director, OIL India Limited 15. Shri Ajit Kumar, Deputy Secretary, Ministry of Petroleum & Natural Gas 16. Shri Amith Garg, Executive Director, Ministry of Railways 17. Shri S.M.A. Razi, Director, Ministry of Railways 18. Shri V. Kalyana Rama, CMD, Container Corporation of India 19. Dr. T. Natarajan, Joint MD, Gujarat State Petronet Limited 20. Shri Nagaraj, CMD, PEC Limited 21. Shri K.P. Jangod, General Manager, GUVNL 22. Shri B.R. Naidu, Zonal Officer, CPCB, Vadodara 23. Shri Ajay Bhadoo, Vice-Chairman & CEO, Alang Shipbuilding, Gujarat

Maritime Board 24. Shri Atul Sharma, Deputy General Manager, GMB 25. Shri Ravi M Parmar, Chairman, Kandla Port Trust 26. Shri R.K. Jha, Secretary, Kandla Port Trust 27. Shri Sanjay Swarup, Director, CONCOR 28. Shri Ved Prakash, Group General Manager, CONCOR 29. Shri A.N. Talati, Additional General Manager, Gujarat Narmada Valley

Fertilizers Company 30. Shri H.R. Bosamia, Senior Engineer, Gujarat Alkalies & Chemicals

Limited 31. Shri D.U. Vyas, General Manager, Gujarat Mineral Development

Corporation 32. Shri A.K. Makadia, General Manager, Gujarat Mineral Development

Corporation 33. Shri H.D. Dalsania, Senior V.P., Gujarat State Fertilizers & Chemicals

Limited

(ii) Reserve Bank of India Scheme for Sustainable Restructuring of Stressed Assets; problems faced by Banks due to rising NPA of different categories; RBI Master Circular on Cash Reserve Ratio and Statutory Liquidity Ratio; and Notifications issued on Demonetization and problems/grievances of customers regarding collection and disbursement of cash by Banks due to demonetization in Gujarat

1. Dr. Anil Ranga, Director, Department of Economic Affairs, Ministry of Finance

2. Shri R.N. Dubey, Economic Advisor, Department of Financial Services, Ministry of Finance

3. Shri Ashwini Kumar, CMD, Dena Bank 4. Shri Sanjeev Nautiyal, Chief General Manager, State Bank of India 5. Shri G. Malleswara Rao, Zonal Manager, Andhra Bank 6. Shri Shalil M. Awate, Chief General Manager & Zonal Head, IDBI Bank 7. Smt Vibha Aren, Deputy General Manager & Circle Head, Punjab

National Bank 8. Shri R.N. Sharma, General Manager & Zonal Head, Bank of Baroda 9. Shri A.N. Shiva Swamy, Regional Manager, Syndicate Bank 10. Shri G. Malleswara Rao, General Manager, Syndicate bank 11. Shri Alok Chaudhry, General Manager, Canara Bank 12. Shri V.S. Renganathan, General Manager, Canara Bank,

(iii) Central Electricity Regulatory Commission (Power Market) Regulations, 2010

1. Shri Vikram Singh, Central Electricity Authority, Ministry of Power 2. Smt Sonal Mishra, Managing Director, Gujarat Industries Power

Corporation Limited 3. Shri Kiran Mishra, Deputy General Manager, Gujarat Industries Power

Corporation Limited 4. Shri S.K. Negi, Managing Director, Gujarat Energy Transmission

Corporation Limited 5. Shri Bijal A Shah, Managing Director, Uttar Gujarat Vij Company Limited 6. Shri R.B. Kothari, GMF & CFO, Uttar Gujarat Vij Company Limited 7. Shri P.R. Dahake, Managing Director, Gujarat State Electricity

Corporation Limited 8. Shri M.B. Kaka, Senior CGM & CFO, Gujarat State Electricity

Corporation Limited

1. On behalf of the Committee, the Chairman welcomed all the representatives of various

organization to the meeting. At the outset, he briefed the Committee about the mandate of the

Committee, stating that the main function of the Committee is to scrutinize and report to the

Rajya Sabha whether the powers to make rules, regulations, bye-laws, etc conferred on it by

the Constitution or delegated by Parliament are being properly exercised by the executive

authorities or not.

2. ***

3. ***.

4. ***.

5. ***

6. ***

7. ***

8. ***

9. ***

10. ***

11. ***

12. ***

13. ***

14. ***

15. ***

16. ***

17. ***

18. ***

19. ***

20. ***

21. The Committee then took up for discussion the Notifications issued on Demonetization

and problems/grievances of the customers regarding collection and disbursement of cash by

Banks. Department of Economic Affairs, Ministry of Finance informed the Committee that

the present scheme of Demonetization under Section 26 of the Reserve Bank of India Act,

1934 is a bold move of the government to eradicate black money/slush money operating for

decades. In the last two attempts of demonetization made in 1946 & 1978, the scale of

operation was not as expansive due to the sheer size of the cash component in the economy.

India remains a cash based economy and hence the circulation of Fake Indian Currency Notes

continues to be a menace. The incidence of fake Indian currency notes in the higher

denomination has increased. The fake notes are used for illegal, antinational and terrorist

activities. A parallel shadow economy corrodes and eats into the vitals of the country’s

economy. It generates inflation which adversely affects the poor and the middle class more

than the others. It deprives Government of its legitimate revenues which could have been

otherwise used for welfare and development activities. Therefore, they stated that the

cancellation of existing high denomination bank notes will curb funding of terrorist activities

with the proceeds of FICN and the use of existing FICN network for subversive activities. It

will also help reduce tax avoidance and bring more transactions into the formal economy.

22. Dena Bank informed the Committee that given the fact that demonetization has affected

the labour intensive industries the most they had organized over 9700 camps for opening of

accounts of unorganized sectors/other persons not having accounts and have mobilized over

1.77 lakh accounts since 26.11.2016. It was further informed that Dena Banks liquidity

improved by Rs 12300/- crore on account of demonetization and at this liquidity was utilized

to reduce market borrowings to the tune of Rs 6990 crore, reduction in bulk deposits to the

tune of 1440 crore and investments on Government securities and LAF operations to the tune

of Rs 3100 crore & Rs 225 crore, respectively. IDBI Bank informed the Committee that a

substantial amount of the liquidity generated during the period from November 26 to

December 9, 2016 was kept as additional (incremental) CRR with the RBI. A large portion of

incremental deposits was still lying with the Bank as cash, which cannot be deployed, unless

deposited in currency chests and credited into IDBI Bank’s account with RBI.

23. SBI informed that the Committee that during the period from 9th November, 2016 the

Bank did receive number of clarifications/directions from RBI and they made all efforts to

disseminate these to all its offices/branches and appropriate functionaries were also put in

place by the Bank to facilitate implementation of these instructions at all the Branches. Canara

Bank informed the Committee that they had received 10 cases of deviations wherein their

bank officials were found to be involved in depositing old currency notes in different accounts

and suitable action had been initiated/taken as per the staff accountability policy of the Bank.

Syndicate Bank informed that they had appointed Digi Banker, a trained staff member, in all

its branches to assist customers in understanding various digital channels for reducing

dependency on cash based transactions, apart from helping them in downloading/using these

applications.

24. Concluding the meeting the Chairman was of the view that the efforts made by the State

in giving effect to the different environment protection rules framed by the Ministry of

Environment, Forest and Climate Change was very commendable and it could act as an

example to other States. The Chairman stated that the Hazardous and Other Wastes

(Management and Transboundary Movement) Rules, 2016 was a very important rule and

urged the agencies present to implement it effectively to ensure its success. He further

observed that banks had worked very dedicatedly in the last few weeks to ensure that the

common man and small traders are not harassed unduly due to the demonetization exercise.

25. The meeting thereafter concluded with a mutual vote of thanks.

Annexure IV

STUDY NOTE OF THE COMMITTEE’S DISCUSSION AT MUMBAI ON 06.01.2017

The Committee met at 10.00 A.M. on the 6th January, 2017 at Mumbai to discuss various

rules/regulations, viz. (i) Reserve Bank of India Scheme for Sustainable Restructuring of Stressed Assets; problems faced by Banks due to rising NPA of different categories; RBI Master Circular on Cash Reserve Ratio and Statutory Liquidity Ratio; and Notifications issued on Demonetization and problems/grievances of customers regarding collection and disbursement of cash by Banks due to demonetization; and (ii) Insurance Regulatory Development Authority (Investment) Regulations, 2016. The following Members, officers of the Committee and representatives of Central Government, State Government and different organizations were present during the meeting:- Present

1. Dr.T. Subbarami Reddy, Chairman Members

2. Shri Ali Anwar Ansari 3. Prof. M.V. Rajeev Gowda 4. Shri S. Muthukaruppan 5. Shri Bhaskar Rao Nekkanti 6. Dr. K. Keshava Rao 7. Shri Palvai Govardhan Reddy 8. Shri Sanjay Seth 9. Shri Shankarbhai N. Vegad

Special Invitee

1. Shri Rajkumar Dhoot Rajya Sabha Secretariat

4. Shri Mahesh Tiwari, Director 5. Shri R.S. Rawat, Joint Director 6. Shri Mohit Misra, Committee Officer

Representatives of Central Government, State Government and different organizations

(iv) Reserve Bank of India Scheme for Sustainable Restructuring of Stressed Assets; problems faced by Banks sue to rising NPA of different categories; RBI Master Circular on Cash Reserve Ratio and Statutory Liquidity Ratio; and Notifications issued on Demonetization and problems/grievances of customers regarding collection and disbursement of cash by Banks due to demonetization in Gujarat

13. Dr Urjit R. Patel, Governor, Reserve Bank of India 14. Shri R. Gandhi, Deputy Governor, Reserve Bank of India 15. Shri N.S. Vishwanathan, Deputy Governor, Reserve Bank of India 16. Dr. A.K. Verma, Joint Secretary, Ministry of Power 17. Dr. Anil Ranga, Director, Department of Economic Affairs, Ministry of

Finance 18. Shri R.N. Dubey, Economic Advisor, Department of Financial Services,

Ministry of Finance 19. Smt Arundhati Bhattacharya Chairman, State Bank of India 20. Shri P.S. Jayakumar, MD & CEO, Bank of Baroda 21. Shri Melwyn Rego, MD & CEO, Bank of India 22. Shri R.A. Sankara Narayanan, Executive Director, Bank of India 23. Shri Arun Tiwari, CMD, Union Bank of India 24. Shri Ravindra Marathe, MD & CEO, Bank of Maharashtra 25. Shri Rajeev Rishi, CMD, Central Bank of India 26. Shri R. Amalorpavanathan, DMD, NABARD 27. Shri K. Venkateshwara Rao, Chief General Manager, NABARD 28. Shri A.K. Kapur, DMD, SIDBI 29. Shri Sriram Kalyanaraman, MD & CEO, NHB 30. Shri Yaduvendra Mathur, CMD, EXIM Bank 31. Shri Debasish Mallick, DMD, EXIM Bank 32. Smt Chanda Kochhar, MD & CEO, ICICI Bank 33. Shri N.S. Kannan, Executive Director, ICICI Bank 34. Shri Kaizad Bharucha, Executive Director, HDFC Bank 35. Shri Manish Kumar, MD & Chief Risk Officer, Kotak Mahindra Bank 36. Shri Dipak Gupta, Joint MD, Kotak Mahindra Bank 37. Shri G.M. Yadwadkar, DMD, IDBI bank 38. Shri Sanjeev Kaushik, DMD, IIFCL 39. Shri Rajat Monga, Chief Financial Officer & Senior Group President, YES

Bank 40. Ms Shikha Sharma, MD & CEO, AXIS Bank 41. Shri Cyril Anand, President-Risk, AXIS Bank 42. Shri Pushpendra Sharma, Head-Compliance, Ratnakar Bank Limited 43. Shri Naresh Karia, CFO, Ratnakar Bank Limited 44. Shri Animesh Chauhan, MD & CEO, Oriental Bank of Commerce 45. Shri Dibakar Mohanty, MD, State Bank of Bikaner & Jaipur 46. Smt Usha Ananthasubramanian, MD & CEO, Punjab National Bank 47. Shri S. Jatinderber Singh, CMD, Punjab & Sind Bank 48. Shri Pawan Bajaj, MD & CEO, United Bank of India 49. Shri T.K. Thakkar, MD & CEO, UCO Bank 50. Shri Rakesh Sethi, CMD, Allahabad Bank 51. Shri Zarin Daruwala, Chief Executive Officer, Standard Chartered Bank 52. Shri Vinod Paptist, Head- Customer Experience 53. Shri Rajesh Verma, Head- Treasury, DCB Bank Limited 54. Shri Ramaswamy Meyyappan, Chief Risk Officer, Indusind Bank

55. Shri Anil K. Rao, Head- Operations, Indusind Bank 56. Shri Ajeet Agarwal, Director, Rural Electrification Corporation Limited 57. Shei Rajeeva Sharma, CMD, Power Finance Corporation Limited

(v) Insurance Development Regulatory Authority (Investment) Regulations, 2016

9. Shri Nilesh Sathe, Member (Life), IRDAI 10. Smt Usha Sangwan, Managing Director, Life Insurance Corporation of

India 11. Shri V. Chandrasekaran, Executive Director, Life Insurance Corporation of

India 12. Shri Satish Chandra Singh, Executive Director, Life Insurance Corporation

of India

26. On behalf of the Committee, the Chairman welcomed all the representatives to the

meeting. At the outset, he briefed the Committee about the mandate of the Committee, stating

that the main function of the Committee is to scrutinize and report to the Rajya Sabha whether

the powers to make rules, regulations, bye-laws, etc conferred on it by the Constitution or

delegated by Parliament are being properly exercised by the executive authorities or not.

27. ***

28. ***

29. The Committee took up for discussion the Notifications issued on Demonetization and

problems/grievances of the customers regarding collection and disbursement of cash by

Banks. The Chairman stated that the Committee supports the initiative taken by the RBI and

Government to curb the problem of fake currency notes, financing of terror activities and

black money by way of Demonetization. However keeping in view the way it had been

implemented it raised serious questions regarding the preparedness of the system to handle

such a major exercise. The problems faced by the people in general and also the stress faced

by the Banking system had also been observed by the Committee. In this respect the

Committee sought to have the views of the Banks and other Financial organizations present

on the steps needed to be taken to handle this process in a more organized and systematic

manner in the coming months and ensure that the common man does not suffer in the process.

The Committee sought to be apprised about the steps taken to use the liquidity generated in

the process in a more productive and growth oriented manner. The Committee also sought to

be briefed about the steps taken by the Ministry to ensure that the hoarding of the new

currency notes does not take place and measures that have been taken up in collaboration with

the Banks to prevent it.

30. ***

31. The Governor informed the Committee that the demonetization has led to increase in the

bank’s balance-sheets due to the increase in the deposits and this has lead to decrease in the

yield on the government securities which effects their treasury operations and profits and

thus effecting their bottom-line.

32. ***

33. ***

34. The Committee then sought clarifications on the following issues i.e. (i) reasons for not

getting these notifications vetted from the Ministry of Law & Justice and laying them before

the Parliament; (ii) why RBI want ahead with this exercise of demonetization if it was not

prepared for it and thereby putting the whole nation into lot of troubles; (iii) what were the

reasons that for controlling approximately 6% black money in the economy, 86% of the

currency in the economy was demonetized; (iv) till when RBI proposed to lift the weekly

limits on withdrawal as it was severely affecting the business/units in which daily working

capitals required are particularly in the construction sector, tea plantations etc; (v) in the

rural sector number of villages are still not connected to the banks and the nearest banks are

very far off for such people it has caused excessive hardship; (vi) apprehensions have been

raised that a part of the black money has come back into the banks, in this respect, what steps

are proposed to account for this black money; and (vii) steps to be taken against bank

employees who have indulged in shady activities in this phase of demonetization.

35. Governor, RBI informed that as on date the same number of currency notes had been

released in the economy as there were on 8th November, 2016, and, for sectors where the

amount of loans was less than one crore they have been given a forbearance of 90 days from

re-payment of loan. The Committee was informed that RBI was continuously studying the

situation and the limits on withdrawals would be raised in the near future. The four note

currency presses were working to their full capacity. He also briefed the Committee on the

status of NPAs in the economy and the steps taken to handle it in a more coordinated manner.

36. CMD, State Bank of India informed that during the 50 day period of demonetization

they received deposits to the level of Rs 3,19,806 crores and Rs 2,24,554 crorers were

withdrawn in this phase. She informed that on a daily basis more than a thousand Suspect

Transaction Reporting are reported to the Financial Investigation Unit. In fact the banks only

have been reporting about such cases and so the issue is about the individuals involved in

such activities rather than the concerned banks. She informed that it was not so easy to use

the Jan-Dhan accounts and this was possible only with the collusion of bank officials. She

assured the Committee that the banking sector was taking all precautions to ensure that such

activities did not happen and stringent action would be taken against the officials found

indulging in such activities. She briefed the Committee about the steps taken for the farmers

to ensure that cash shortages didn’t affect the purchasing of seeds, fertilizers and pesticides

and they were going out of the way to help them out.

37. Bank of Baroda informed the Committee that they had received about 65,000 crores of

deposits and their balance-sheet had gone up by38,000 crores. He further informed that the

interest rate had been reduced to 8.35% and when the loans come up for re-financing the

benefits of lower interest-rates will be passed on to them. Power Finance Corporation

informed that they were the largest Non-banking finance company in the country and their

87% business was with the State Power utilities. He informed that they had disbursed 36,000

crores in the current financial year. He informed that renewable power projects were coming

up for financing from the private sector. He informed that they were the nodal agency for

Integrated Power Development Scheme which covers about 4200 towns in the country for

upgradation and strengthening of transmission and distribution system.

38. In regard to hardship of rural areas in the event of demonetization Deputy Governor, RBI

informed that utmost secrecy had to be maintained about the demonetization process and

once the demonetization was announced they have been continuously observing the situation

and cash was being sent to all places as required. Rural areas have also been given priority so

as to ensure that agriculture does not suffer. He informed that RBI was working in

collaboration with NABARD to ensure that the agriculture sector receives adequate cash as

the next season agriculture activities had started. He stated that they would issue currency as

and when needed by the system.

39. ICICI Bank informed that they received cash deposits of 85,000 crores in the 50 day

period from 8th November to 31st December, 2016 and they disbursed 28,000 crores in this

period. It was informed that they had reduced their MCLR by 70 basic points and now their

MCLR was 8.2% and their home loan interest rates had also been reduced. She informed that

their NPAs were going up but still they were making all efforts to handle it. She informed

that all the banks were meeting once in every two weeks to discuss issues about restructuring

of loans under S4A, Strategic debt restructuring and so on to ensure that better management

of sick units. Bank of India informed that they received 55,000 crores in the said period and

after taking into account the withdrawals their deposits had gone up by 35,000 crores. He

informed that they had reduced the one year MCLR by 75% basic points. He informed that

they had approved two cases for the Overseeing Committee under the S4A Scheme.

40. Punjab National Bank informed that they collected 95,200 crores in the said period and

they reduced the MCLR across all categories which would in turn lead to reduction of the

interest rates also. Axis Bank informed that they had got deposits of about 80,000 crores and

withdrawals had been to the tune of 20,000 crores. In reply to a query from the Committee,

NABARD informed that the interest rate in the cooperative credit structure for crop loans the

ultimate lending rate to farmers was 7% in which 3% is given as incentive by the Central

government for timely payment of loans and only 4% is collected from the farmers and even

this is reduced in by the State governments. In many States the State Governments decide the

rates at which the Farmers cooperative societies would lend to the farmers and in this respect

the NABARD or RBI instructions don’t apply to the lending rates fixed by these societies for

the farmers.

41. ***

42. ***

43. ***

44. Concluding the discussions the Chairman urged the Reserve Bank of India to coordinate

closely with the Banks to ensure that the economy recovers at the earliest from the impact of

demonetization. He impressed upon the organizations present to take note of the grievances

faced by the common man and ensure that schemes are devised to provide relief to worst

affected sections of the society.

45. The meeting thereafter concluded with a mutual vote of thanks.

Annexure V

STUDY NOTE OF THE COMMITTEE’S DISCUSSION AT BENGALURU ON 08.01.2017

The Committee met at 10.00 A.M. on the 8th January, 2017 at Bengaluru to discuss

various rules/regulations, viz. (i) Environment (Protection) Rules, 1986; (ii) Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 and Solid Waste Management Rules, 2016; (iii) Reserve Bank of India Scheme for Sustainable Restructuring of Stressed Assets; problems faced by Banks due to rising NPA of different categories; RBI Master Circular on Cash Reserve Ratio and Statutory Liquidity Ratio; and Notifications issued on Demonetization and problems/grievances of customers regarding collection and disbursement of cash by Banks due to demonetization in Karnataka, Tamil Nadu & Kerala; and (iv) Central Electricity Regulatory Commission (Power Market) Regulations, 2010. The following Members, officers of the Committee and representatives of Central Government, State Government and different organizations were present during the meeting:- Present

1. Dr.T. Subbarami Reddy, Chairman Members

7. Shri Ali Anwar Ansari 8. Shri Biswajit Daimary 9. Dr. K. Keshava Rao 5. Shri Palvai Govardhan Reddy 6. Shri Shankarbhai N. Vegad

Rajya Sabha Secretariat

7. Shri Mahesh Tiwari, Director 8. Shri R. S. Rawat, Joint Director 9. Shri Mohit Misra, Committee Officer

Representatives of Central Government, State Government and different organizations

(vi) Environment (Protection) Rules, 1986; Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 and Solid Waste Management Rules, 2016

34. Shri T.M. Vijay Bhaskar, Additional Chief Secretary (Forest &

Environment), Government of Karnataka 35. Shri Ramachandra, Secretary (Environment), State Government of

Karnataka 36. Shri Manoj Kumar Singh, Joint Secretary, Ministry of Environment,

Forest & Climate Change

37. Shri Manjunath Prasad, Commissioner, BBMP 38. Shri S. Sarfaraz Khan, Special Commissioner, BBMP 39. Shri Lakshman, Chairman, Karnataka State Pollution Control Board 40. Shri Sandeep Chatterji, Director, Ministry of Electronics & Information

Technology 41. Shri S. Suresh, Additional Director, CPCB 42. Shri T.S. Raju, CMD, HAL 43. Shri M.V. Gowatama, CMD, Bharat Electronics Limited 44. Shri D.K. Hota, CMD, Bharat Earth Movers Limited 45. Shri D. Bandyopadhyay, Director, BHEL 46. Shri S.K. Tyagi, Director, Software Technology Park of India

(vii) Reserve Bank of India Scheme for Sustainable Restructuring of Stressed Assets; problems faced by Banks due to rising NPA of different categories; RBI Master Circular on Cash Reserve Ratio and Statutory Liquidity Ratio; and Notifications issued on Demonetization and problems/grievances of customers regarding collection and disbursement of cash by Banks due to demonetization in Karnataka, Tamil Nadu & Kerala

58. Dr. N. Srinivas Rao, Economic Advisor, Department of Financial Services, Ministry of Finance

59. Smt Ipsita Mitra, Under Secretary, Department of Economic Affairs, Ministry of Finance

60. Shri P.J. Thomas, General Manager, Reserve Bank of India 61. Shri P. Vasudevan, General Manager, Reserve Bank of India 62. Shri N.Krishnamachari, MD & CEO, State Bank of Mysore 63. Shri C.R. Sasikumar, MD& CEO, State Bank of Travancore 64. Shri Jatinderbir Singh, CMD, Punjab & Sind Bank 65. Shri Mahesh Kumar Jain, MD & CEO, Indian Bank 66. Shri R. Subramaniakumar, MD & CEO, Indian Overseas Bank 67. Shri J.K. Garg, MD & CEO, Corporation Bank 68. Dr. Kishore Sansi, MD, Vijaya Bank 69. Shri Rakesh Sharma, MD & CEO, Canara Bank 70. Shri D. Mohapatra, Executive Director, Canara Bank 71. Shri Arun Srivastava, MD & CEO, Syndicate Bank 72. Shri P. Jayarama Bhat, MD & CEO, Karnataka Bank Limited 73. Shri G. Sreeram, MD & CEO, Dhanlaxmi Bank 74. Shri Vinod Joshi, General Manager, Punjab National Bank 75. Shri Shishupal Yadav, Circle Head, Punjab National Bank 76. Shri K.S.N. Murty, Nodal Regional Head, Union Bank of India 77. Smt Rajni Mishra, Chief General Manager, State Bank of India 78. Shri K. K. Venkatsessan, DGM & Deputy Zonal Head, Bank of Baroda 79. Shri G. Rajendra Kumar, General Manager, State Bank of Hyderabad 80. Shri Narayana Murthy B, CGM & Zonal Head, IDBI Bank Limited 81. Shri Johnson E.K., DGM, State Bank of Bikaner & Jaipur

82. Shri Nanda Kumar V., DGM, Federal Bank 83. Shri K.M. Swamy, DRM & RO, Central Bank of India 84. Shri V. Venkatesh, DGM, Central Bank of India

(viii) Central Electricity Regulatory Commission (Power Market) Regulations, 2010

13. Shri P. Ravi Kumar, Secretary (Power). State Government of Karnataka 14. Shri Vikram Singh, Director, Central Electricity Authority, Ministry of

Power

46. On behalf of the Committee, the Chairman welcomed all the representatives to the

meeting. At the outset, he briefed the Committee about the mandate of the Committee, stating

that the main function of the Committee is to scrutinize and report to the Rajya Sabha whether

the powers to make rules, regulations, bye-laws, etc conferred on it by the Constitution or

delegated by Parliament are being properly exercised by the executive authorities or not.

47. ***

48. ***

49. ***

50. ***

51. ***

52. ***

53. ***

54. ***

55. ***

56. ***

57. ***

58. The Committee then took up for discussion the Notifications issued on Demonetization

and problems/grievances of the customers regarding collection and disbursement of cash by

Banks particularly in Karnataka, Kerala and Tamil Nadu. The Chairman stated that the

Committee supports the initiative taken by the RBI and Government to curb the problem of fake

currency notes, financing of terror activities and black money by way of Demonetization.

However, keeping in view the way it had been implemented it raised serious questions regarding

the preparedness of the system to handle such a major exercise. Given the problems faced by the

people in general and the stress faced by the Banking system, the Committee sought to have the

views of the Banks and other Financial organizations present on the steps needed to be taken to

handle this process in a more organized and systematic manner in the coming months and ensure

that the common man does not suffer in the process. The Committee sought to be apprised about

the steps taken to use the liquidity generated in the process in a more productive and growth

oriented manner.

59. Canara Bank informed that in the period from 9th November to 31st December, 2016 they

received a total of 55,076.63 crore of Specified Bank Notes and their overall deposits have gone

up by 23,729 crore in the said period. Their Bank also issued instructions to distribute cash to far

flung areas on priority basis viz. for plantation workers at North-East and Coorg District of

Karnataka. Vijaya Bank informed the Committee that as per the Financial Action Task Force

Report of 2013, the Indian rupee was the ninth most counterfeited currency in terms of its value

and stood third in terms of the number of fake currency notes detected around the world. State

Bank of Mysore informed that they had identified 4 cases of suspected malpractices in their bank

in this phase of demonetization and all the bank staff involved have been placed under

suspension with immediate effect. It was also informed that in this phase they received

remittances of Specified Bank Notes for a total value to Rs 11,605.31 crore upto 30th December,

2016. Karnataka Bank stated that the excess liquidity in the form of cash on hand was a cause of

worry to the banking system as the same was not earning any returns. However, the funds

deposited by the customers to the savings bank accounts need to be paid interest at the rate of

4%.

60. ***

61. ***

62. The meeting thereafter concluded with a mutual vote of thanks.

Annexure VI

STUDY NOTE OF THE COMMITTEE’S DISCUSSION AT HYDERABAD ON 10.01.2017

The Committee met at 10.00 A.M. on the 10th January, 2017 at Hyderabad to discuss

various rules/regulations, viz. (i) Environment (Protection) Rules, 1986; (ii) Solid Waste Management Rules, 2016 and progress made with respect to Green Vishakha Project; (iii) Reserve Bank of India Scheme for Sustainable Restructuring of Stressed Assets; problems faced by Banks due to rising NPA of different categories; RBI Master Circular on Cash Reserve Ratio and Statutory Liquidity Ratio; and Notifications issued on Demonetization and problems/grievances of customers regarding collection and disbursement of cash by Banks due to demonetization and recovery of fake and new currency in Andhra Pradesh & Telangana; and (iv) Central Electricity Regulatory Commission (Power Market) Regulations, 2010. The following Members, officers of the Committee and representatives of Central Government, State Government and different organizations were present during the meeting:- Present

1. Dr.T. Subbarami Reddy, Chairman Members

10. Shri Ali Anwar Ansari 11. Shri Biswajit Daimary 12. Prof. M.V. Rajeev Gowda 13. Shri Bhaskar Rao Nekkanti 14. Dr. K. Keshava Rao 7. Shri Palvai Govardhan Reddy 8. Shri Shankarbhai N. Vegad

Rajya Sabha Secretariat

1. Shri Mahesh Tiwari, Director 2. Shri R.S. Rawat, Joint Director 3. Shri Mohit Misra, Committee Officer

Representatives of Central Government, State Government and different organizations

(i) Environment (Protection) Rules, 1986; Solid Waste Management Rules, 2016 and progress made with respect to Green Vishakha Project

1. Shri Lingaraj Panigrahi, Special Chief Secretary, Government of Andhra

Pradesh 2. Shri Surendra Pandey, Special Secretary (Environment, Forest, Science &

Technology), Government of Andhra Pradesh

3. Shri Manoj Kumar Singh, Joint Secretary, Ministry of Environment, Forest & Climate Change

4. Shri P. Srinivas, Additional Transport Commissioner, Government of Andhra Pradesh

5. Shri V. Vinay Chand, Commissioner, Tirupati Municipal Corporation, State Government of Andhra Pradesh, Government of Andhra Pradesh

6. Shri R. Karikal Valaven, Principal Secretary (Municipal Administration & Urban Development)

7. Shri K Kanna Babu, Commissioner & Director of Municipal Administration, Government of Andhra Pradesh

8. Shri R.G. Kalaghsti, Principal Chief Conservator of Forests, Government of Andhra Pradesh

9. Dr. T. Baburao Naidu, Vice-Chairman, Visakhapatnam Urban Development Authority, State Government of Andhra Pradesh

10. Shri Hari Narayanan M, Commissioner, Greater Visakhapatnam Municipal Corporation, State Government of Andhra Pradesh

11. Shri Phani Kumar, Chairman, Andhra Pradesh State Pollution Control Board

12. Shri Amith Garg, Executive Director, Ministry of Railways 13. Shri A.K. Gupta, Additional General Manager, South Central Railways 14. Shri A.K. Gupta, Additional General Manager, East Coast Railways 15. Ms Chandralekha Mukherjee, DRM, East Coast Railways 16. Shri Anand Kumar, Additional Director, Central Pollution Control Board 17. Shri P.L. Haranadh, Deputy Chairman, Visakhapatnam Port Trust 18. Shri Venu Gopal, Secretary, Visakhapatnam Port Trust 19. Lt. Cdr. Neeraja Varadharajan, Eastern Naval Command, Indian Navy 20. Shri N. Sridhar, CMD, Singareni Colleries Company Limited 21. Shri D.P. Bahuguna, Chief General Manager, MSTC 22. Shri D.N. Prasad, Advisor, Ministry of Coal 23. Shri M.P. Chaudhari, CMD, MOIL Limited 24. Shri T.K. Pattnaik, Director, MOIL Limited 25. Shri C.D. Goswami, General Manager, MECON Limited 26. Shri P. Madhusudan, CMD, RINL 27. Shri D.N. Rao, Director, RINL 28. Shri B.R. Reddy, CMD, South Eastern Coalfields Limited 29. Shri G. Singh, CMD, Central Coalfields Limited 30. Shri M.V. Subba Rao, Director, KIOCL Limited 31. Shri J. Chandana, Manager, M/s Brandix India Appord City (P) Limited

(ii) Reserve Bank of India Scheme for Sustainable Restructuring of Stressed Assets;

problems faced by Banks sue to rising NPA of different categories; RBI Master Circular on Cash Reserve Ratio and Statutory Liquidity Ratio; and Notifications issued on Demonetization and problems/grievances of customers regarding collection and disbursement of cash by Banks due to demonetization and recovery of fake and new currency in Andhra Pradesh & Telangana

1. Shri Harish Kumar Gupta, IGP (Law & Order), State Government of Andhra Pradesh

2. Shri T. Krishna Prasad, Additional DGP, State Government of Andhra Pradesh

3. Shri V.V. Srinivasa Rao, Additional C.P., State Government of Telangana 4. Shri T. Prabhakar Rao, DIG (Intelligence), State Government of

Telangana 5. Shri P. Narasimha Rao, Additional DCP (Vijayawada), State Government

of Andhra Pradesh 6. Shri A.S. Khan, Joint CP (Vizag City), State Government of Andhra

Pradesh 7. Dr. N. Srinivas Rao, Economic Advisor, Department of Financial

Services, Ministry of Finance 8. Smt Ipsita Mitra, Under Secretary, Department of Economic Affairs,

Ministry of Finance 9. Shri R. Subramanium, Regional Director, Reserve Bank of India 10. Shri G. Ramesh, General Manager, Reserve Bank of India 11. Shri J. Meghanan, General Manager, Reserve Bank of India 12. Shri Suresh N. Patel, MD & CEO, Andhra Bank 13. Shri S.K. Kalra, ED, Andhra Bank 14. Shri Hardayal Prasad, Chief General Manager, State Bank of India 15. Shri Mani Palvesan, Chief General Manager, State Bank of Hyderabad 16. Shri D.R. Sharma, DGM & Zonal Manager, UCO Bank 17. Shri D. Chirajeevi, DGM, Union Bank of India 18. Shri G. Viswanath, General Manager, Bank of India 19. Shri Ashwin H. Dalal, Zonal Manager, Dena Bank 20. Shri Vinod Joshi, General Manager, Punjab National Bank 21. Shri D.M. Majumdar, General Manager, Corporation Bank 22. Shri Joseph Lawrence Tobias, United Bank of India 23. Shri N. Srinivasa Rao, AGM, United Bank of India 24. Shri Siddhart Mishra, Zonal Head, ICICI Bank Limited 25. Shri N. Ram Babu, DGM, Bank of Maharashtra 26. Smt P.L. Khuntia, DGM, Allahabad bank 27. Shri B. Dasgupta, CGM & Zonal Head, IDBI Bank Limited 28. Shri E. Ratan Kumar, Field General Manager, Central Bank of India 29. Shri S.P. Sharma, Field General Manager, Syndicate Bank

(iii) Central Electricity Regulatory Commission (Power Market) Regulations, 2010

1. Shri P. Ravi Kumar, Secretary (Power). State Government of Karnataka 2. Shri Vikram Singh, Director, Central Electricity Authority, Ministry of

Power 3. Dr. P.V. Ramesh, CMD, Rural Electrification Corporation Limited 4. Shri I.S. Jha, CMD, Power Grid Corporation of India Limited

5. Shri V. Shekhar, Executive Director, Power Grid Corporation of India Limited

6. Shri K.V.S. Baba, CEO, POSOCO 7. Smt Shubha Sarma, Secretary, CERC 8. Shri G. Adinarayana. Director (Finance), Andhra Pradesh Power

Generation Corporation Limited 9. Shri P. Sivaramanjayulu, Chief Engineer, Andhra Pradesh Power

Generation Corporation Limited 10. Shri P. Dinesh, Joint Managing Director, Andhra Pradesh Power

Transmission Company Limited 11. Shri Ghanshyam Prasad, Chief Engineer, Central Electricity Authority,

Ministry of Power 12. Shri V.B. Fadnavis, Regional E.D., NTPC limited

1. On behalf of the Committee, the Chairman welcomed all the representatives to the

meeting. At the outset, he briefed the Committee about the mandate of the Committee, stating

that the main function of the Committee is to scrutinize and report to the Rajya Sabha whether

the powers to make rules, regulations, bye-laws, etc conferred on it by the Constitution or

delegated by Parliament are being properly exercised by the executive authorities or not.

2. ***

3. ***

4. ***

5. ***

6. ***

7. ***

8. ***

9. ***

10. ***

11. ***

12. ***

1. ***

2. ***

3. The Committee then took up for discussion the Notifications issued on Demonetization

and problems/grievances of the customers regarding collection and disbursement of cash by

Banks. The Chairman stated that the Committee supports the initiative taken by the RBI and

Government to curb the problem of fake currency notes, financing of terror activities and black

money by way of Demonetization. However, keeping in view the way it had been implemented it

raised serious questions regarding the preparedness of the system to handle such a major

exercise. The problems faced by the people in general and the stress faced by the Banking

system had also been observed by the Committee. In this respect the Committee sought to have

the views of the Banks and other Financial organizations present on the steps needed to be taken

to handle this process in a more organized and systematic manner in the coming months and

ensure that the common man does not suffer in the process.

4. Regional Manager, Reserve Bank of India gave a brief overview of the status of currency

management since 8th November, 2016 in the two States of Telangana and Andhra Pradesh. He

informed that 1,35,000 crore of old notes were withdrawn in the two States and they were still in

the process of lifting them from the banks as these notes are stored in the currency chest of

different banks. They had also started the processing of these old notes. About 62,000 crores of

new notes have been released for circulation in the economy of these States. He accepted that the

state of demonetization was not fully normal and they were making efforts to manage the

situation better. He informed that the problem today was that circulation was not taking place of

the new currency notes.

5. The Committee sought clarification on the basis of which the cash withdrawal limit had

been set by RBI . The Committee felt that if the RBI had undertaken a study of the cash

withdrawals in the last one year then it would have been better placed to decide the permissible

limits of cash withdrawal as it would be closer to the ground realities. The Committee also

pointed frequent modifications made in the rules by way of which the weekly and daily cash

withdrawal limits were affected by RBI.

6. Additional DGP, State Government of Telangana informed that they were investigating

the case of fake currency recovered in the State after demonetization and they were also

following up cases were they caught people trying to exchange large amounts of old notes. DGP,

State Government of Andhra Pradesh informed that they have registered five cases of fake

currency notes after demonetization and they have 18 cases where new currency notes were

seized during search operations. The Committee then raised the issue of impact of

demonetization on naxalism in the States. The Committee was informed that in the short term

there has been a fall in their activities as they are also facing cash shortages. However, the

movement of the naxals is still there. The long term effect of demonetization on the naxal

activities would have to be studied and it was assured that they would do so.

7. UCO Bank informed that in the post 8th November, 2016 scenario they had proactively

taken all possible measures to further enhance the penetration of its Alternate Delivery Channel

and to connect the remotest villagers to the banking system through e-transactions. Syndicate

Bank informed that one officer and five workmen employees of the bank were found to

indulging in suspect activities subsequent to demonetization. Punjab National Bank informed

that since demonetization they had confiscated 497 fake currency notes of Rs 500 and 387 fake

notes of Rs 1000 denomination. Andhra Bank informed that keeping in mind the difficulties

faced by the unorganized sector they had organized 6154 camps for the unorganized sector for

opening PMJDY accounts and a total of 1.24 lakh accounts were opened. As regards adequacy of

cash they stated that the situation was manageable only because of the current withdrawal limit

of Rs 24,000 per week and the actual position would emerge once this limit is withdrawn. State

Bank of India informed that 27,300 crore of Specified Bank Notes had been received by them in

Telangana and Andhra Pradesh and their deposits had gone up by Rs 15,000 crores in these

States. They received Rs 18,000 crore from RBI for dispersal as against the Rs 27,300 of

Specified Bank Notes deposited.

8. Concluding the discussions the Chairman impressed upon the officials the need to

prevent the entry and distribution of counterfeit currency in the economy. This was imperative as

the major exercise of demonetization was carried out to weed out the counterfeit currency

prevalent in the Indian economy. He expressed his apprehension on the reports coming in the

news about recovery of huge volumes of new series of notes as well as counterfeit notes and

expressed the hope that the law enforcement agencies would take proper care and precaution to

prevent the entry of counterfeit currency in the country from abroad. He expressed the

Committees satisfaction over the progress status of Green Vishakha project and hoped that the

target would be achieved in the near future.

9. The meeting thereafter concluded with a mutual vote of thanks.

MINUTES OF THE MEETING OF THE COMMITTEE ON SUBORDINATE LEGISLATION, RAJYA SABHA

III

Third Meeting

The Committee met at 3.00 pm on Tuesday, the 28th

March, 2017 in Room No.126-C

(Committee Chairman’s Room), Parliament House, New Delhi.

Present

1. Dr.T. Subbarami Reddy Chairman

Members

2. Shri Ali Anwar Ansari

3. Shri K. Parasaran

4. Dr.K. Keshava Rao

5. Shri Palvai Govardhan Reddy

6. Shri Sanjay Seth

Secretariat

1. Shri J.G. Negi, Joint Secretary

2. Shri Mahesh Tiwari, Director

3. Shri Rakesh Anand, Joint Director

4. Smt. Monica Baa, Deputy Director

2. At the outset the Chairman welcomed the Members of the Committee to the meeting. The

following draft reports were taken up for consideration and adoption by the Committee:

(i) Draft 230th

Report on Statutory Orders Laid on the Table of the Rajya Sabha during its

240th

Session;

(ii) Draft 231st

Report on the Khadi and Village Industries Commission Regulations, 2007 and

The Framing of Rules and Regulations under the National Trust for Welfare of Persons with

Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999-

Implementation of the 220th

Report of the Committee on Subordinate Legislation, Rajya

Sabha;

(iii) Draft 232nd

Report on Statutory Orders Laid on the Table of the Rajya Sabha during its

241st

Session; and

(iv) Draft 233rd

Report on Notification issued by Ministry of Finance (Department of

Economic Affairs) on Demonetization.

3. The Committee considered the reports and unanimously adopted the draft 230th

, 231st

, 232nd

and 233rd

Reports and decided to present these Reports to the House on the 3rd

April, 2017.

Accordingly, it authorized its Chairman and in his absence Shri Sanjay Seth and Shri Ali Anwar Ansari ,

Members of the Committee, to present the Reports to the House.

4. * * *

5 The meeting adjourned at 3.30 p.m.

____________________

*** Matter not related to the subject.