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11 Feb 2018

15 months later, RBI still processing demonetized notes

RBI far from knowing full effect of demonetization

Fifteen months after demonetization, the RBI is still processing deposited bank notes in an "expedited manner" and doesn't have updated information on the number of demonetized notes.

"The estimated value of specified bank notes received as on June 30, 2017 is Rs. 15.28L crore," it said in response to an RTI query.

It hasn't given a deadline for completion of the process either.

In context

RBI far from knowing full effect of demonetization
Demonetization took out Rs 15.44L crore from circulation


Demonetization took out Rs 15.44L crore from circulation

Before the PM suddenly announced demonetization on November 8, 2016, there were 1,716.5cr notes of Rs. 500 and 685.8cr notes of Rs. 1,000 in circulation totalling Rs 15.44L crore, RBI had said.

Demonetization caused many problems: people had to spend hours in bank queues, low-value currency was rare, and businesses took a hit.

100 people died before 2016 ended, apparently due to demonetization-related stress.

But 99% notes returned to banks in six months

The government insisted the long-term effects would be phenomenal: demonetization would eventually weed out black money, it said. However, by June 30, 2017, 99% of demonetized notes had been returned to banks, RBI said, and only Rs. 16,050cr of Rs. 15.44L crore hadn't returned.

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RBI to announce number of demonetized notes after complete processing

The apex bank is now processing specific bank notes "for their arithmetical accuracy and genuineness and the reconciliation for the same is ongoing."

Fifty-nine Currency Verification and Processing (CVPS) machines, including eight with commercial banks and seven on lease basis, are being operated for the purpose.

RBI said it will comment on the number of demonetized notes after the process is completed.

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How much expenses did RBI incur due to demonetisation and afterwards for counting SBN?

Asked on 11-02-2018 by Anonymous

Answered by NewsBytes

RBI hasn't shared information regarding number of personnel deployed and expenses incurred in counting of old notes. However, as per RBI's annual-report, it spent Rs. 7,965 crore on printing of new Rs. 500, Rs. 2,000 and other notes in 2016-17, more than double of Rs. 3,421 crore spent in 2015-16. The total expenditure of RBI increased by 107.84% to Rs. 31,155 crore in 2016-17.

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Will the next ruling government have constitutional power to re-circulate the demonetised notes?

Asked on 11-02-2018 by Anonymous

Answered by NewsBytes

Theoretically speaking, the next ruling government can re-circulate the demonetised notes by passing an ordinance. However, since 99% of scrapped notes have already come back into system, it makes little sense to re-monetise the remaining 1% notes.

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