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99% Of Scrapped Notes Accounted For

Cost of printing new notes at Rs 7,965 crore. The estimated value of SBNs received as on June 30, 2017 is Rs 15.28 lakh crore

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The Reserve Bank of India’s (RBI) Annual Report says until end-June 2017, almost 99 per cent of the scrapped currency notes were returned to it – that is Rs 15.28 lakh crore of the Rs 15.44-lakh-crore in circulation prior to the mid-night of November 8th when demonitsation kicked in.

The bill for this exercise -- expenditure incurred on security printing -- stood at Rs 7,965 crore for the current year (July16–June’17 which is the RBI’s accounting period) compared to Rs 3,420 crore in the previous comparable.

Mint Road also pointed out SBNs (specified bank notes or scrapped notes) were received by it either directly or from bank branches and, or post offices through the currency chest mechanism. As some of these SBNs are still lying in the currency chests. The value of the SBNs received by the currency chests has been credited to the banks’ account on “said to contain basis”.

“Till such time these notes are processed by the Reserve Bank for their numerical accuracy and authenticity, only an estimation of SBNs received back is possible. Subject to future corrections based on verification process when completed, the estimated value of SBNs received as on June 30, 2017 is Rs 15.28 lakh crore”, said RBI. That means you may see a revision again.

Digital gets a leg up

The big takeaway in all this is currency demand appears to have settled at “a new normal“ -- currently around 87 per cent of the pre-demonetisation peak). Its due to a sharp rise in electronic modes of payments. The year on-year growth rates of the total volume of retail electronic payments which had averaged around 37 per cent during April to October 2016, shot up to nearly 70 per cent in November and then further to as much as 123 per cent in December 2016; in subsequent months, the growth rates have moderated but remain high. Mint Road’s Annual Report says there appears to be a structural break in the volume and value of retail electronic payments, coinciding with the onset of demonetisation and the special measures put in place to promote digital payments. “Going forward, the Reserve Bank would continue its efforts towards migrating to a less-cash economy while ensuring safety and enhancing the efficiency of the payments system”.

As remonetisation gathered pace, the currency in circulation (CIC) also moved up week after week and reached 74.3 per cent of the peak by the end of the financial year. At end-March 2017, CIC amounted to 8.8 per cent of GDP, down from 12.2 per cent in the previous year. At this level, our currency to GDP ratio compares well with a host of advanced and emerging market economies (such as Germany, France, Italy, Thailand and Malaysia).