Demonetisation check: 99% of junked notes returned to banks, says RBI

Indians returned almost all of the estimated Rs 15.4 lakh crore in high-currency bills removed from circulation in a shock move late last year, the Reserve Bank of India said in its annual report released on Wednesday.

“The objective of note ban was to bring down cash in the economy, bring digitisation, expand the tax base and fight black money,” Finance Minister Arun Jaitley said, adding, “People with inadequate understanding of how to tackle black money linked note ban with money returned to the system.”

The RBI said out of 632.6 crore pieces of Rs 1,000 currency notes in circulation, 8.9 crore have not been returned post note ban last November.

The government on November 8, 2016, banned old Rs 500 and Rs 1,000 notes in an attempt to weed out black money in the economy. The old currency was allowed to be deposited in banks, with unusual deposits coming under income tax scrutiny.

The government replaced old Rs 500 notes with new ones, but no replacement for Rs 1000 notes has been made. Instead, a new Rs 2,000 note was introduced in the system.

RBI said there were as many 588.2 crore of Rs 500 notes, both old and new in circulation as of March 31, 2017. As of March 31, 2016, there were 1,570.7 crore Rs 500 notes in circulation.

The report said the cost of printing of currency notes more than doubled to Rs 7,965 crore in 2016-17 from Rs 3,421 crore in the previous year on account of new currency printing. Besides, new Rs 500 & Rs 2,000 notes, the RBI has also printed new Rs 200 notes.

The objective of note ban was to bring down cash in the economy, bring digitisation, expand the tax base and fight black money

— ARUN JAITLEY, Finance Minister