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RBI Says 99% of Old Currency Came Back; Opposition Calls Move a Failure

Only Rs 16,000 crore of demonetised currency was not deposited with banks, according to data in the Reserve Bank of India's annual report.

News18.com

Updated:August 31, 2017, 8:45 AM IST
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RBI Says 99% of Old Currency Came Back; Opposition Calls Move a Failure
A file image of demonetised currency notes of 500 and 1000. (Image: PTI)
New Delhi: The Reserve Bank of India has revealed in its annual report that Rs 15.28 lakh crore, or 99 per cent of the Rs 15.44 lakh crore scrapped currency notes, came back into the system after demonetisation.

Only Rs 16,000 crore of demonetised currency was not deposited with banks, according to data in the Reserve Bank of India's annual report. The report, which has come after a delay of nearly two months as the central bank was still collating the data on the scrapped currency, also says that only about 89 million units of the banned Rs 1,000 notes, worth Rs 8,900 crore, didn’t come back into the system.

The share of the newly introduced Rs 2,000 notes in the total value of banknotes in circulation till March-end was a little more than 50 per cent. The overall currency in circulation into the system had come down by 20.2 per cent on a year-on-year basis.

The RBI's balance sheet also says that in 2016-17 the cost of printing currency was Rs 7,965 crore. This means that the RBI received only Rs 8,000 crore of benefit from the unprecedented decision of the government to scrap 86% of bank notes.

The calculation of the government at the time of demonetisation was that at least Rs 1.5 lakh crore to 2 lakh crore worth of old notes would be extinguished and this would be the proportional gain, through transfer of resources from RBI to the government.

This is the first time the central bank is revealing details on the remonetised notes after Prime Minister Narendra Modi scrapped old Rs 1000 and Rs 500 currency notes on November 8 last year.

The next few days had seen long queues at bank branches to deposit and exchange the demonetised bank notes. With people facing inconvenience, the government’s decision to ban old currency notes and handling of the whole process came under scrutiny.

Reserve Bank of India (RBI) Governor Urjit Patel appeared before a probing parliamentary panel several times, but the total number of demonetised currency notes deposited in banks remained elusive for long.

Separately, a Parliamentary panel on Finance led by M. Verappa Moily is all set to table its report on Demonetization next week. The report has indicted the government and called demonetisation a failure, sources told News18.

The panel is set to be reconstituted as its term is ending, though the facts examined by the panel and the report prepared by it do not change. The panel has examined witnesses including RBI Governor Urjit Patel. In his last testimony to the panel a couple of months ago Governor Patel told the panel that demonetised notes were still being counted.

The data has given the Opposition ammunition to attack the Narendra Modi government, which has been bullish on the note ban exercise. Former finance minister P Chidambaram, in a series of tweets, chastised the government and said the RBI should be “ashamed for recommending demonetisation."

“99% notes legally exchanged! Was demonetisation a scheme designed to convert black money into white?” he tweeted. “RBI 'gained' Rs 16000 crore, but 'lost' Rs 21000 crore in printing new notes! The economists deserve Nobel Prize,” he further said.

Left leader Sitaram Yechury called the note ban anti-national and said boasts of black money, terror and counterfeit currency ending with it have all fallen flat. “Lives & livelihoods lost, the economy got a shock and workers lost their jobs. India can never forgive Modi govt for this anti-national act,” he tweeted.
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