NEW DELHI: The government had sent a reference to the Reserve Bank of India asking it to approach its central board to consider a proposal to invalidate Rs 500 and Rs 1,000 notes, three people familiar with the matter told ET, elaborating on the sequence of events that led to one of the country’s most significant reforms in recent times. However, six months before the initiative, a small group of top officials belonging to the key stakeholders had begun working on the move.The formal communication cited above was sent by the department of economic affairs in the finance ministry, according to two persons privy to deliberations.RBI’s central board considered the proposal and approved it on November 8 and the endorsement was conveyed to the government. The proposal was quickly approved by the Cabinet and announced by PM Narendra Modi in a televised address at 8 pm the same day.ET approached members of the central board but they either declined to speak on its deliberations citing confidentiality agreements or didn’t respond.While the formal communication was sent by DEA nearer to the date of the board meeting, a group of top-ranking officials at RBI PMO and the finance ministry had begun work on the contours of the exercise more than six and half months ago before it actually unfolded.The process and the preparation carried out by this very select grouping have not been disclosed though officials have acknowledged that discussions with RBI had been on for some time.RBI and the finance ministry did not respond to queries sent by ET.It should be noted that Urjit Patel took over from Raghuram Rajan as governor in September. There was no response to an email sent to Rajan on Sunday morning India time.The RBI Act, 1934, empowers the government to give directions to the central bank. “The central government may from time to time give such directions to the bank as it may, after consultation with the governor of the bank, consider necessary in the public interest,” according to Section 7 of the Act. The central government can declare any series of any denomination ceases to be legal tender, on recommendation of the central board, as per the Act.The communication sent by DEA was a reference or a request and not a direction, said the people cited.The November 8 announcement cancelled about 86% of currency in circulation, prompting economists and the Opposition to question the decision as well as the process by which it had been reached.The government said the move was aimed at battling black money, counterfeiting and terror financing. It was also part of a strategic shift to a cashless economy in which transactions could be more easily tracked. Power Minister Piyush Goyal had told Parliament on November 16 that RBI’s central board had recommended the move and Cabinet approved the decision.“The Reserve Bank board took this decision and sent it to the government, which appreciated the decision and moved to take Cabinet approval for the plan to discontinue old notes of Rs 500 and Rs 1,000,” he had said.Besides government and RBI nominees, the central board has Nachiket Mor of the Bill and Melinda Gates Foundation, financial expert Bharat Doshi, N Chandrasekaran of Tata Consultancy Services and former bureaucrat and expert on education and finance Sudhir Mankad as independent members.The RBI nominees include the governor and three deputy governors. The government nominees include the secretaries of the economic affairs and financial services departments.