With a mission to end the ongoing cash crunch in the country, Government along with the Reserve Bank of India is moving straight up towards remonetising 70 per cent of the notes by February end. In a report published by the State Bank of India, RBI is rapidly printing notes of varied smaller denominations along with printing Rs 2,000 notes so as to optimise the printing capacity.
“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,” the report said further.
“Also, with petrol pump transactions amounting to Rs 4.5 lakh crore on an annualised basis, even a 20 per cent shift to digital would mean a saving of Rs 1 lakh crore. Hence normalcy will return most likely by February end,” said SBI on the following development. SBI also mentioned that the latest RBI data on currency in circulation, newly supplied currency till January 13 was around Rs 7 lakh crore. This means that near about 70 million pieces of notes of different denominations are being printed per day at the printing press. This translates into around 1.8 billion pieces per month by the printing press, the report said.
As per the central bank’s data, around Rs 5.9 lakh crore of notes were remonetised till December 19, hence during the intervening period of January 13-December 19, about Rs 1 lakh crore value of notes were printed. “Given the current printing press capacity, it is thus highly unlikely that the RBI has only printed Rs 500 rupee notes in entirety,” SBI report said.
Going by the data, around 2.2 billion pieces of 500 rupee notes of Rs 1.1 lakh crore, an unlikely event since the printing capacity is less than 2 billion pieces in a month. Hence, the RBI has most likely also printed notes of varied smaller denominations as well as printing Rs 2000 rupee notes so as to optimise the printing capacity, SBI said.
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On January 5, SBI had said in its report: “If we assume that the RBI continues to print as it is doing as of now, then by January-end, only about 67 per cent of the currency should get replaced (vis-à-vis earlier estimate at 75 per cent).” By February, at this rate, the RBI could thus print as much as 89 per cent of the total currency, it had said.
SBI has also said that if apex bank move towards printing smaller denomination notes aggressively, this number could reach up to 80 per cent. The January 5 report said things will be back on track by February-end, as opposed to predictions of the currency swap exercise-linked crisis lasting longer.