99 per cent of banned notes are back in system, says RBI

Mumbai: The demonetisation of the Rs 500 and Rs 1,000 currency notes announced in November 2016 appears to have failed to achieve the desired results as the provisional data released by the Reserve Bank of India on Wednesday showed that around 98.96 per cent of the banned notes came back into the banking system. In its annual report for 2016-17, the central bank said that Rs 15.28 lakh crores out of Rs 15.44 lakh crores of the banned currency notes were deposited as of June 30, 2017. However, the Reserve Bank noted that these figures were provisional and could change once the verification process for the numerical accuracy and authenticity of the deposited notes are completed.

The RBI data also showed that Rs 8,900 crores worth of currency notes in the denomination of Rs 1,000 were in circulation as of March 2017 despite having ceased to exist as legal tender.

Stating that the total expenditure incurred on security printing stood at Rs 7,965 crores for the period from July 2016 to June 2017, against Rs 3,420 crores in 2015-16, the RBI said the remonetisation continued at a steady pace with the total notes in circulation increasing to Rs 15.06 lakh crores as on June 30, 2017. This is about 85 per cent of the total notes in circulation as on November 4, 2016.

Interestingly, the RBI report also highlighted the significant growth in the number of counterfeit currency notes detected by various banks. During FY17, altogether 762,072 counterfeit notes were detected in the banking system, of which 95.7 per cent were detected by commercial banks. The detection of counterfeit notes was 20.4 per cent higher than the previous year. Barring Rs 100 notes, the detection of counterfeit notes increased across denominations, notably Rs 500 and Rs 1,000 during 2016-17.

The report also noted that the value of banknotes in circulation declined by 20.2 per cent over the year to Rs 13.10 lakh crores as on March 31, 2017. The volume of banknotes, however, increased by 11.1 per cent, mainly due to higher infusion of banknotes of lower denomination in circulation after the demonetisation. In value terms, the share of notes of Rs 500 and above, which had together accounted for 86.4 per cent of the total value of banknotes in circulation at end-March 2016, came down to 73.4 per cent as of March 2017. The share of the newly-introduced Rs 2,000 banknotes in the total value of banknotes in circulation was 50.2 per cent at end-March 2017.