Shaktikanta Das says Rs. 12.44 lakh crore in invalid notes may not have come back to banks

The Finance Ministry on Thursday said the Rs. 12.44 lakh crore figure reported by the Reserve Bank of India as the amount having been deposited in banks since the November 8 demonetisation announcement could be inflated due to double-counting.

Department of Economic Affairs Secretary Shaktikanta Das said the RBI had infused three times the annual figure of low denomination notes in the five weeks since demonetisation, adding that the supply of Rs. 100 notes was increased by 50 per cent in that period.

“Regarding the figures in the media, and even the RBI has released some figures, on the notes that have come back, there are a lot of areas where we feel there could be double counting,” Mr. Das said at a press conference. “We have identified those areas and asked the RBI and the banks to again check. So the process of checking and counting is happening.”

Three times

“The total quantum of low denomination notes which the RBI normally supplies in a year, three times of that has been supplied in the last five weeks,” Mr. Das said. “To take the example of Rs. 100 notes, about Rs. 1.6 lakh crore were in circulation on November 8. Between November 8 and now, more than Rs. 80,000 crore in value has been supplied to the market. Similarly for Rs. 10, Rs. 20 and Rs. 50 notes.”

He said that roughly about 50 per cent of the notes that became demonetised would be back in supply by the end of the month. While more than Rs. 15 lakh crore of notes were demonetised on November 8, so far more than Rs. 5 lakh crore had been put back in circulation.

Recalibration of ATMs

Stressing that two lakh ATMs had been recalibrated, Mr. Das rubbished reports that a much smaller number were in fact functional. “Some banks prefer to give cash through their branches than in ATMs so that they can cater to their own customers,” he said.

Mr. Das said the new notes seized by the enforcement agencies were being put back in circulation as soon as possible.

Crop loans

Emphasis was on supplying cash to district cooperative banks so that crop loans could be given. The Rabi sowing this year was almost on a par with that seen last year.

Mr. Das remained non-committal on the rules that would apply at banks, including the withdrawal limit of Rs. 24,000 a week per account, after December 31.

“What the government will do after December 31, I will not be able to say now,” Mr. Das said. “You will know it on December 30. I do not foresee the situation worsening after December 31.”

Made in India

Mr. Das also highlighted the fact that the new Rs. 500 and Rs. 2,000 notes and their security features were entirely designed in India. “To that extent, they are much more secure and the opportunity to counterfeit them is far lower than in the earlier notes,” he said.

While the government and the RBI had earlier decided to focus on the release of Rs. 2,000 notes so that the value of the currency that was removed from the system could be quickly matched, the emphasis had now shifted to Rs. 500 notes.

“The supply of Rs. 500 notes will ensure that Rs. 2,000 notes being hoarded will come back into circulation,” Mr. Das said. “The focus is on printing Rs. 500 notes. The distribution process is being further streamlined and each printing press is being linked to the areas around it to prevent the criss-crossing of supply lines. Airlifting is continuing wherever necessary.”