Exactly who came up with the recommendation to demonetise old notes remains a matter of speculation, although some government officials have publicly said it was on Reserve Bank's advice the radical step to withdraw 86 per cent of the country's cash was taken.
According to an Indian Express report, which cites a note submitted to a Parliamentary panel last month, the Reserve Bank has clarified it was the government that "advised" the move with the bank agreeing with the former's rationale.
"The government, on 7th November, 2016, advised the Reserve Bank that to mitigate the triple problems of counterfeiting, terrorist financing and black money, the Central Board of the Reserve Bank may consider withdrawal of the legal tender status of the notes in high denominations of Rs 500 and Rs 1,000," RBI said in a seven-page note submitted to the panel, headed by Congress leader M Veerappa Moily.
Just one day later, the Reserve Bank met to "consider" the advice and gave its nod, according to the report. RBI has previously revealed in an RTI query that the decision to demonetise was taken by the RBI board less than three hours before PM Modi went on air on November 8.
Union Minister for Power, Coal, New and Renewable Energy Piyush Goyal has previously said the decision was taken by the RBI Board.
RBI had also been working on introducing a new series of higher denomination notes including Rs 2,000 for nearly two years which coincided with the demonetisation drive to flush out black money and fake currency. It was confident that with the available stock of other denominations, printing of new notes, and notes in its currency chests, the transition to new notes would be manageable.
However, on Nov 8, the stock of the Rs 2000 notes at the currency chests was only Rs 94,660 crores, just six per cent of the Rs 15 lakh crores worth of notes that was withdrawn, the report pointed out.