99.3% Of Demonetised Currency Notes Returned To Banks So Far: RBI

Posted August 30, 2018

He referred to the annual report of the RBI a year ago which said at that time that most of the notes were counted but the process was not complete.

Prime Minister Narendra Modi, in a televised address, had announced the scrapping of Rs 1,000 and Rs 500 notes on 8 November 2016, touting it as an attack on black money, corruption and terror funding.

The RBI in its annual report said it expects the economy to expand at 7.4 percent in the financial year to March 2019 and inflation to pick up pace.

The annual report of the Reserve Bank of India (RBI) released Wednesday showed that fake notes detected in the denominations of new Rs 500 and Rs 2,000 has jumped sharply even as overall detection fell. They have been disposed of and the final account that has come up is about Rs. 10 thousand odd crore of the notes have not come back.

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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.

The Reserve Bank of India finally revealed the quantum of notes that have returned into the system post the Demonetization. However, small number of notes are still with law enforcement agencies.

A collateral damage as a result of rise in printing and other cost was dividend RBI pays to the government.

In March 2017, the share of Rs 500 and Rs 2,000 currency notes, in value terms, accounted for 72.7% of the total value of banknotes in circulation. The volume of banknotes, however, increased by 2.1 per cent. The report also states the amount returned to be worth Rs 15.3 lakh crore against the Rs 15.4 lakh crore that was in circulation on November 8, 2018. It is a natural process as the GDP grows, payment system grows, currency grows.

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The government replaced old Rs 500 notes with new ones, but no replacement for Rs 1,000 notes have been made.

PM Modi's decision to ban high-value currency notes, along with a chaotic introduction of the goods and services tax last year, acted as a drag on economic expansion with provisional data showing growth slumped to a four-year low of 6.6 percent in the fiscal year 2018.

"... 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".

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