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Less Than 30% Of Scrapped Currency Value Has Been Replaced In New Notes, According To RBI

It is estimated that currency worth about ₹14.18 lakh crores was taken out of circulation on November 8.

07/12/2016 4:38 PM IST | Updated 07/12/2016 7:07 PM IST
Himanshu Sharma / Reuters

It's been nearly a month since demonetisation was annouced and only about ₹4 lakh crore in new currency notes have been supplied, based on data shared by the Reserve Bank of India today. That is less than 30 per cent of the total value of money that was scrapped by the withdrawal of ₹1,000 and ₹500 notes.

RBI Deputy Governor R. Gandhi told reporters on Wednesday that ₹4 lakh crore in new currency notes was released between 10 November and 5 December. It is estimated that currency worth about ₹14.18 lakh crores was declared invalid by the scrapping of old ₹1,000 and ₹500 notes.

Gandhi made assurances of continuous and adequate supply of new currency notes and asked people not to hoard currency.

The latest numbers partly explain why ATMS are still running dry and many banks report of inadequate cash. Out of the new currency that has been introduced, a big chunk has been in the new ₹2,000 currency notes, which have been hard to transact in, given the cash shortage of lower denominated notes, worsening the current cash crunch.

Separately, according to RBI, banks have already received about ₹11.5 lakh crores in discontinued currency notes. That means about 80 per cent of the value of currency that was taken out of circulation (based on data by Credit Suisse) and over 75 per cent of value of notes based on official government data, has come back into the system so far.

On Wedneday, while announcing monetary policy of keeping interest rates unchanged at 6.25%, RBI Governor Urjit Patel defended the demonetisation policy saying the decision was not taken in haste and "high" levels of secrecy had to be maintained.

On withdrawal limits, RBI said caps on withdrawals will be removed only when the situation normalises.

Gandhi added that RBI has recalibrated presses in the past two weeks to print more ₹500 and ₹100 notes. However, no decision has been taken yet to reintroduce ₹1,000 notes.

While Patel assured that the money deposited in the banks is a liability that RBI will honour, saying that withdrawal limits are not permanent.

"There is no question of any trust deficit being breached anywhere," said Patel.

With PTI inputs

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