99.3% of demonetised currency returned to banks: RBI

Demonetisation Flawed in planning not in principle

Demonetisation Flawed in planning not in principle

The report states, "SBNs (specified banknotes) were received by the Reserve Bank either directly or from bank branches/ post offices through the currency chest mechanism".

In terms of 100 notes, 2,21,447 fake pieces were detected in 2015-16, which slumped to 1,77,195 in 2016-17 (the year of demonetisation) but then bumped back up to 2,39,182 in 2017-2018.

"There are some small notes which are stuck in the whole process, which can come back". The statistics suggest that the demonetisation exercise failed to check black money, which was claimed to be one of the main aims of banning specified notes.

As much as 99.3 per cent of the junked Rs 500 and Rs 1,000 notes have returned to the banking system, the RBI said Wednesday, indicating that just a miniscule percentage of currency was left out of the system after the government's unprecedented note ban aimed at curbing black money and corruption.

The demonetisation of Rs 500 and Rs 1000 notes in November 2016 had prompted the RBI to print new currency notes.

In the annual report that was released on Wednesday, the RBI said that the processing of Rs 500 and 1,000 banknotes was complete, adding that 99.3 per cent of the notes, worth Rs 15.3 lakh crore have been returned to the banks.

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Bharatiya Janata Party spokesperson Sambit Patra said black money found an address due to demonetisation, carried out in November 2016, and prompted the government to bring over 18 lakh suspect bank accounts under scrutiny. It was said that this amount would be over Rs 3 lakh crore. "Swadeshi" economist S. Gurumurthy, who was recently appointed to the RBI's board, called it a "much-needed attack on excessive liquidity", while other government officials decried the high proportion of Rs 500 and Rs 1,000 notes. Currency notes of higher value are easier to hoard, and can be used to proliferate black money.

"The value of banknotes in circulation increased by 37.7 per cent over the year to Rs 18,037 billion at March-end 2018", it said.

While The Wire has over the last eighteen months reported and analysed how India's currency-in-circulation (CiC) and currency-to-GDP ratio has not changed drastically after demonetisation, the RBI's annual report provides further proof of how little things have changed.

The RBI said that the total value of the demonetised currency returned to the banks now stands at Rs 15.3 lakh crore.

The move hit India's growth, driving it to a three-year low of 5.7 percent in the June quarter of 2017, with several small businesses shutting down and many labourers losing their jobs.

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