RBI confirms 99.3 % old currency returns to banking system

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The cat is finally out of the bag as the Reserve Bank of India has finally confirmed that as much as 99.3 percent of the junked Rs 500 and Rs 1,000 notes have returned to the banking system after demonetization.

The Annual Report of RBI for the financial year 2017-18 points out that of the Rs 15.41 lakh crore worth Rs 500 and Rs 1,000 notes in circulation till November 8, 2016, when the note ban was announced, notes worth Rs 15.31 lakh crore have come back to the banking system.

That raises a question mark on the wisdom of such a huge exercise that meant huge expenditure on the printing of new currency, long queues before the ATMs and banks and job cuts. The RBI annual report confirms that only a minuscule percentage of currency was left out of the system after the government’s unprecedented note ban aimed at curbing black money, corruption and alleged circulation to terrorists outfits. Already the jury is out on the talk of digitalization of economy because more than the amount that was with people as cash is out of banks post demonetization.

The Reserve Bank of India (RBI), data show that just Rs 10,720 crore of the junked currency did not return to the banking system.  Post-demonetization, RBI spent Rs 7,965 crore in 2016-17 on printing new Rs 500 and Rs 2,000 and other denomination notes, more than double the Rs 3,421 crore spent in the previous year. In 2017-18 (July 2017 to June 2018), it spent another Rs 4,912 crore on the printing of currency, the annual report said.