Friday, 19 October, 2018

Demonetisation: 99.3% of old notes now with banks, says RBI

99.3 Per Cent Of Demonetised Notes Returned To Banks RBI 99.3% of demonetized-notes worth Rs. 15.31-lakh-crore returned to banks: RBI
Jodi Jackson | 30 August, 2018, 17:28

While the actual estimate of fake Indian notes in circulation (FICN) has been hotly debated, the central bank's annual report implies that demonetisation may not have done much to curb the generation of new fake currency.

The Congress on Wednesday demanded an apology from Prime Minister Narendra Modi, alleging he lied to the country over the demonetisation issue, after the RBI said nearly all the 500 and 1,000 currency notes scrapped in November 2016 returned to the banking system.

The "humungous task of processing and verification of specified bank notes (SBNs) was achieved", it said. The SBNs received were verified, counted and processed in the sophisticated high speed CVPS (currency verification and processing system) for accuracy and genuineness, and shredded and briquetted in the shredding and briquetting system, it said.

The old notes of 500-rupee and 1,000-rupee denomination ceased to be legal tender from December 31, 2016.

"The very big task of processing and verification of Specified Bank Notes (SBNs) was successfully achieved", RBI said.

The RBI said the processing of SBNs has since been completed. "If that was the objective then yes, it has failed because Rs 13,000 crore is the amount, which is possibly held outside the country in nations such as Nepal, Bhutan, Bangladesh, Burma who simply did not have the facility to exchange the currency", the news channel reported Sen as saying.

Stating that the country paid a huge price for demonetisation, he said: "Over 100 lives were lost, 15 crore daily wage earners lost their livelihood for several weeks".

The RBI says most of the demonetised currency is back, indicating that just a minuscule percentage of currency was left out of the system after BJP government's call for unprecedented note ban aimed at curbing black money and corruption. "That alone was a loss of Rs 2.25 lakh crore a year".

The central bank's annual report that came out Wednesday - which includes an assessment of India's currency management, a subject that has a number of implications for the impact of demonetisation - lays out a few implications of how one of the Modi government's controversial decisions has played out almost two years later.

"There are some small notes which are stuck in the whole process, which can come back".

"... India's currency to GDP ratio moved up to 10.9 per cent in 2017- 18, returning to being amongst the highest levels of currency usage in peer emerging market economies (EMEs) and advanced economies (AEs) as well". Over five lakh shell companies were closed down, he said. The share of Rs 2,000 notes by value has declined to 37.3% as on March 2018 as compared to 50.2% a year ago.

The RBI, in its previous annual report released, in August 2017 had stated that Rs 15.28 lakh crore, or 99 per cent of the demonetised currencies totally worth Rs 15.44 lakh crore, had returned to the banks by 30 June 2017.

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