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60% demonetised notes already accounted for: RBI

Author: Mayur Shetty, TNN
Publication: The Times of India
Date: November 29, 2016
URL:   http://timesofindia.indiatimes.com/business/india-business/60-demonetised-notes-already-accounted-for-RBI/articleshow/55675856.cms

Around 60% of the value of the demonetised notes (Rs 14 lakh crore), has already been accounted for, according to data released by the Reserve Bank of India (RBI) on Monday.

While deposits of the demonetised notes in banks since November 9, when the decision kicked in, total Rs 8.11 lakh crore (57% of the total value of demonetised notes), notes worth Rs 33,498 crore (3%) have been exchanged. Even as deposits surge, there have been reports that the printing of Rs 2,000 notes has been stalled, which is said to have resulted in a drop in the legal tender being released by banks.

Between November 10 and 18, notes worth Rs 1.36 lakh crore were pumped out by banks, but the value dropped to Rs 1.14 lakh crore between November 18 and 27. It was around a week after the demonetisation kicked in that reports surfaced that the printing of Rs 2,000 notes had been stalled to generate more of the new Rs 500 notes. Unlike the Rs 2,000 notes, which were printed weeks in advance, the RBI had no stockpile of the new Rs 500 notes.

The total amount of legal tender released since November 9 amounts to Rs 2,50,115 crore, which is around 18% of the value of the withdrawn notes. Of this, Rs 2,16,617 crore was withdrawn from banks and ATMs.

There were expectations in the government that old notes+ worth Rs 3 lakh crore would not return to the banking system. This, it was believed, would result in a fall in the RBI's liabilities and thus translate into windfall gains for the government. However, if the current pace of deposit accretion continues, the value of the old notes coming back would inch up, and the windfall gains may not be realised.
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