RBI Confirms 99.15% of Demonetized Money Coming Back

Virginia Carson
August 30, 2018

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".

After the note ban, old junked notes, called specified bank notes (SBNs), were allowed to be deposited in banks with unusual deposits coming under income tax scrutiny. 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.

Over 99 per cent of the Rs 15.3 lakh crore taken out of circulation through demonetisation in November 2016 has returned to the Reserve Bank of India (RBI), the central bank announced on Wednesday.

Department of Economic Affairs Secretary Subhash Chandra Garg said the demonetisation process has achieved its objectives of reducing black money, fake currency, terrorist financing and promoting digital transactions. At least this is what the numbers make us feel as 99.3 per cent of demonetised notes have returned into the system revealed the annual report of 2017-18 released by RBI on Wednesday. In the immediate aftermath of the demonetisation measure effected in November, 2016 the government had claimed that a sum of Rs. three lakh crore to Rs. four lakh crore would not come back to the banks, implying that it would correspond to the unaccounted money in the system.

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Now, even if 100% of demonetised currency returned to the system, it does not mean all of this cash was "white" or money that was generated through wholly legal means.

"I suspect that the bulk of the Rs 13,000 crore is in Nepal and Bhutan and some that was lost or destroyed". "My first question now is - where has the black money gone?" she remarked.

Sen also mentioned the use of black money, he said that trade and money lending are the commonest ones.

RBI data showed that the value of banknotes in circulation increased by 37.7% over the year to Rs. 18.04 lakh crore at end-March 2018.

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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.

"... 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".

"The total SBNs returned from circulation is Rs 15,310.73 billion", the RBI said in its report.

In a series of tweets, the former finance minister also said RBI figure has suggested that the government had actually demonetised only Rs 13,000 crore and the "country paid a huge price" for it. However, the supply of banknotes was lower than the previous year.

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