1. SBI Research sees 70% money supply normalisation by February-end

SBI Research sees 70% money supply normalisation by February-end

Currency circulation is likely to normalise by the end of February as nearly 70 per cent of the notes will be remonetised by then, a report said today.

By: | Mumbai | Published: January 20, 2017 9:58 PM
"We are still maintaining that 70 per cent of the notes will be remonetised by February-end," said the report brought out by SBI Research.  (Reuters) “We are still maintaining that 70 per cent of the notes will be remonetised by February-end,” said the report brought out by SBI Research. (Reuters)

Currency circulation is likely to normalise by the end of February as nearly 70 per cent of the notes will be remonetised by then, a report said today.

“We are still maintaining that 70 per cent of the notes will be remonetised by February-end,” said the report brought out by SBI Research.

The report said with transactions at the fuel pumps amounting to Rs 4.5 trillion on an annualised basis, even a 20 per cent shift to digital would mean a saving of Rs 1 trillion. “Hence normalcy will return most likely by the end of February.”

As per the latest RBI data on currency in circulation, the newly-supplied currency till January 13 was around Rs 7 trillion, which means roughly 70 million pieces of notes of different denominations are being printed per day.
It translates into around 1.8 billion pieces a month by the currency printing presses, it said.

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Till December 19, 2016, the RBI had said that around Rs 5.9 trillion notes were remonetised. Hence, during the intervening period of December 19 and January 13, about 1 trillion worth of notes have been printed.

The report said given the current printing press capacity, it is highly unlikely that the RBI has only printed Rs 500 banknotes in entirety. This would mean around 2.2 billion pieces of Rs 500 notes worth Rs 1.1 trillion, an unlikely event since the printing capacity is less than two billion pieces in a month, it seems going by the data.

Hence, the monetary authority has most likely also printed notes of varied smaller denominations as well as Rs 2,000 bills to optimise the printing capacity, the report said.

“Printing of new notes is going on at a pace keeping in mind the less-cash future and not the past, and we welcome this new normal. The future belongs to money as a medium of exchange and not as a store of value,” it added.

  1. Kalidas
    Jan 21, 2017 at 2:11 am
    Why only SBI comes out with such research and report? Are they sponsored by the government? Why no other nationalized banks, private banks like Axis, HDFC, ICICI or Kotak Mahindra and foreign banks like HSBC, CITIBANK, DEUTCHE BANK and Goldman Sachs, Merrill Lynch with much larger research department do not come out with any essment or Research Report? Even same SBI Chairwoman Mrs Bhattacharya mentioned during Demonetization period that more than 5 lakh crores of banned notes would not return, and THEY DID RETURN. Forget SBI. Now we know why do they have humongous level of NPA in their books.
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