Customers wait in line to use an automated teller machine operated by the State Bank of India in Varanasi, Uttar Pradesh. (Photographer: Dhiraj Singh/Bloomberg)

Rs 12.44 Lakh Crore In Old Notes Have Come Back To Banks, Says RBI

Close to 80 percent of the cash withdrawn due to the scrapping of Rs 500 and Rs 1,000 notes has now returned to the banking sector.

Speaking to PTI and ANI in Mumbai, Reserve Bank of India deputy governor R Gandhi said that banks have received Rs 12.44 lakh crore in old currency deposits since the demonetisation decision was announced on November 8.

86 percent of the country’s currency in circulation, which was in the form of Rs 500 and Rs 1000 notes, turned void after the announcement. This worked out to about Rs 15.4 lakh crore. It was widely speculated that at least a quarter of this currency, which may have been unaccounted cash, would not come back to the system. The deposit data available now, however, suggests that a large part of invalidated currency has returned to the banking system.

Supply Of New Notes

Commenting on the supply of new notes, Deputy Governor Gandhi said that 21.8 billion pieces of new notes have been supplied to banks since the demonetisation announced.

  • Of this, 20.1 billion pieces belong to small denominations of Rs 10, 20s, 50s, 100s
  • 1.7 billion pieces of Rs 2000 and Rs 500 notes have been provided
  • Banks have issued notes worth Rs 4.61 lakh crore through branches and ATMs

Gandhi urged the public to “freely spend their notes instead of hoarding” while adding that more and more new currency notes are being issued daily.

The entire system has been continuously gearing up for supporting the circulation of notes in the hands of the public. Daily we are issuing more and more notes, getting them printed and issued. This will be a continuous effort and the public is requested to freely use the notes they have in their hands rather than hoarding them.
R Gandhi, Deputy Governor, Reserve Bank of India

Despite that assurance, withdrawal limits for new currency notes remain in place and the RBI is yet to make any significant relaxations to those limits. Currently, citizens can withdraw upto Rs 24,000 a week from bank branches and Rs 2500 daily using their debit cards from ATMs.

Maintaining A Strict Watch

At the same briefing, Deputy Governor SS Mundra said that the regulator has taken note of the alleged involvement of some bank officer in unscrupulous activities in the course of the demonetisation process.

Banks have done a good job but in an operation of this size, there are always elements that may have behaved in a way not expected of them, said Mundra. He added that the RBI is keeping a constant vigil and has asked banks to keep track of any untoward transactions or actions.

In one such instance, three officials of Axis Bank have been arrested for alleged illegal activities in the exchange of old bank notes. On Tuesday, NDTV reported that an RBI official in Bengaluru has also been arrested for alleged money laundering activities.

Mundra said the concerned official has been suspended.

Let me clarify that it was a junior functionary of the Reserve Bank of India and it was reported by the investigating agency that he was recorded to be present in a bank branch where some suspected transaction was happening. Having known about that, the concerned employee has been suspended. We have instituted investigation and due action would be taken once the details are ascertained.
S.S. Mundra, Deputy Governor, Reserve Bank of India