Key Highlights:

  • Rs 15.44 lakh crore worth SBN banned on November 08, 2016
  • Rs 16,000 crore of banned notes not back in RBI system
  • RBI says to parliamentary panel "No information on black money returned"

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In a parliamentary panel discussion, the Reserve Bank of India (RBI) stated that it has 'no information' on how much black money must have been investigated as a result of demonetisation. 

Replying to the queries, RBI said to panel that it has "no information" on how much black money has been extinguished as a result of demonetisation of Rs 500/1,000 notes or about unaccounted cash legitimised through exchange of currency post note ban. 

Further, RBI mentioned that it also has "no information" whether demonetisation is being planned to be implemented at regular intervals.

Last month, RBI released its annual accounts report for 2016-17 - under which showed that 98.96% of banned specified bank notes (SBN) old Rs 500 and Rs 1000 - have come back to the system. 

When demonetisation drive was announced on November 08, 2017, about 6,857.82 million notes of Rs 1000 and 17,165.06 million notes of Rs 500 valuing separately Rs 685,782 crore and Rs 858,253 crore respectively were scrapped. 

Thus, RBI indicated that Rs 15.28 lakh crore was brought back out of the cumulatively banned Rs 15.44 lakh crore. 

Thus, Rs 16,000 crore demonetised value not back in the system. 

Answering to the queries, RBI said the verification for authenticity and numerical accuracy are still on, while some of the specified bank notes (old Rs 500/1,000 notes) which were accepted by banks and post offices are still lying in currency chests.

Annual Report of RBI revealed -  762,072 pieces of counterfeit notes were detected in the banking system, of which 95.7% were detected by commercial banks. Detection of counterfeit notes was 20.4% higher than the previous year. 

Study done by RBI shows that the rate of FICN detected per million pieces of notes processed at the currency chest level at 7.1 pieces for Rs 500 denomination and 19.1 pieces for Rs 1000 denomination, which were higher than the rate of detection at the Reserve Bank (5.5 pieces for Rs. 500 and 12.4 pieces for Rs. 1000). 

It further informed the panel that the completion of the process of verification will take time in view of the large volume involved.

It has become over eight months now that the PM Narendra Modi's demonetisation move has ended, but things does not seem to ease away for RBI. 

Due to demonetisation, RBI continues to face heat not only from various opposition parties, former finance minister P Chidambaram but also suffers dent in its own financial performance. 

Former Finance Minister P Chidambaram recently in media reports slashed out at the central bank stating "shame on RBI''for not bringing back one% of the demonetised notes in the chest.

Rs 16,000 crore of scrapped notes - which are not back is considered a failure to clamp down on black money, as government officials  claim Rs 3.5 lakh crore of the returned currency is illegitimate and would be put under the scanner. 

Another fall-out of the exercise would be RBI with lower dividend payouts to the government, partly due to the high cost of printing new notes. 

In FY17, RBI’s dividend to the government is nearly half of the amount paid last year Rs 30,659 crore compared to Rs 65,876 crore in the same period of the previous year - reaching at five year low. 

Between June - July 2017, money spent on printing of new notes is estimated to stand at Rs 7,965 crore as against Rs 3,420 crore a year ago same period. 

Also, RBI’s balance sheet expanded by a marginal 1.9% in FY17 (June ending). While its total income declined by 23.6%, the expenditure increased by 107.8%. 

Has demonetisation tackled black money? Finance Ministry explains in four points

  • No info on black money removed by note ban: RBI to Par panel
  • Has demonetisation helped India become a less-cash economy?
  • Where did RBI's expected Rs 30,000-crore more surplus go?