Banks Get More Than Rs 8 Lakh Crore In Old Currency Deposits
60 percent of the amount withdrawn through scrapping of Rs 500 and Rs 1000 notes has now come back to banks
More than half of the value of currency withdrawn as part of the government’s decision to scrap Rs 500 and Rs 1,000 notes has been deposited with banks.
According to data released by the Reserve Bank of India (RBI), banks have reported exchange and deposits amounting to Rs 8.45 lakh crore between November 10 and November 27. Of this, exchange amounted to Rs 33,948 crore while deposits amounted to Rs 8.11 lakh crore.
The withdrawal of Rs 500 and Rs 1,000 notes had taken out currency worth Rs 14.18 lakh crore from circulation starting midnight on November 8. The data released today suggests that close to 60 percent of this amount has come back to the banking sector.
According to a 2013 McKinsey & Co. report, the parallel economy in India may be as large as 26 percent of the country’s gross domestic product (GDP). Going by those estimates, analysts had conjectured that roughly the same amount (25 percent) of the cash withdrawn may not come back to the banking. The amount that doesn’t come back may be extinguished at a later stage, which, in turn, may lead to a fall in liabilities on the RBI’s balancesheet.
However, if a large part of the amount withdrawn comes back, it may show that the proportion of the black economy was smaller than earlier thought or that holders of unaccounted for cash have used other means to deposit their funds in banks. One such route being used is deposits in low-income Jan Dhan accounts which have seen deposits surge by Rs 27,000 crore.
According to the data released by the RBI, citizens have withdrawn Rs 2.16 lakh crore either over-the-counter or through ATMs.
Restrictions on withdrawals have remained in place due to the shortage of new currency notes. People can currently withdraw Rs 2,500 per day from ATMs. The over-the-counter limit remains at Rs 24,000 per week.
Relaxation In Withdrawal Of Legal Tender
In a separate notification on Monday, the RBI made a few relaxations while noting that depositors are hesitating to deposit their money into bank accounts in view of the current limits on cash withdrawals from accounts.
As it is impeding active circulation of currency notes, it has been decided, on careful consideration, to allow withdrawals of deposits made in current legal tender notes on or after November 29, 2016 beyond the current limits; preferably, available higher denominations bank notes of Rs 2,000 and Rs 500 are to be issued for such withdrawals.RBI Notification
The notification suggests that if a depositor were to put currency notes which are presently legal tender into a bank account, a bank would not impose any withdrawal restrictions on that amount.