Demonetisation: 93% old notes back into system, government to be content with Rs 75,000 crore

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Published: January 9, 2017 10:49:28 AM

As the demonetisation drive nears its finale with Rs 14 lakh crore old notes of Rs 500 and Rs 1000 are back, the government might be looking at a possibility that only Rs 75,000 crore in the demonetised currency won't make it to the formal banking system.

demonetisation, demonetisation effects, 93% notes returned, 14 lakh crore returned, Rs 500 1000 returned, demonetisation failureAt the time of the announcement of demonetisation on November 8, 2016, there had been Rs 17.50 lakh crore currency in circulation, out of which Rs 15.50 lakh crore consisted of Rs 500 and Rs 1000. ( PTI)

As the demonetisation drive nears its finale with Rs 14 lakh crore old notes of Rs 500 and Rs 1000 are back, the government might be looking at a possibility that only Rs 75,000 crore in the demonetised currency won’t make it to the formal banking system. At the time of the announcement of the decision, the government had estimated that an amount up to Rs 3 lakh crore, which is nearly 20% of the total value of the demonetised currency, would not flow back into the system or be available for spending once the liability was removed. IE reports state that according to the RBI and the government of India, Rs 14 lakh crore of demonetised money has already flown back into the banking system.

One of the officials told IE that they knew for sure that another Rs 50,000 crore in Rs 500 and RS 1000 notes were with banks across the country at the time of the announcement of demonetisation on November 8, 2016. The government officials also made it clear that an amount of Rs 10 lakh crore had already been supplied to the banks to fill the void post demonetisation. It was further reported that the central government had sought the RBI’s opinion to know whether it would be wise to release Rs 75,000 crore from its own reserves to bring normalcy in the state. But the RBI had been of the opinion that the situation would get back to normal with a period of 15 days or so with Rs 2-2.5 lakh crore of additional new currency, which was then being dispatched to currency chests across the country.

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According to reports, at the time of the announcement of demonetisation on November 8, 2016, there had been Rs 17.50 lakh crore currency in circulation, out of which Rs 15.50 lakh crore consisted of Rs 500 and Rs 1000; 88% in total. Now, with the deposition of Rs 14.50 lakh crore or 93.5% of the demonetised notes in the banking system, the government has reportedly started the process of identifying fake or counterfeit notes. According to the officials, the RBI has about 60 machines that have been engineered to differentiate between fake notes from the bunch of returned currency. But considering the huge sum of money that has been returned, even if these machines worked for 12 hours a day, it would still take 600 days to finish the job.

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