15 Months After Demonetisation, RBI Still Processing Returned Notes: RTI Reply
February 12th, 2018
Image Credits: Zee News
Over a year after the Union government demonetised 86% of India’s currency, the Reserve Bank of India (RBI) said that the demonetised notes that were returned are still being “processed for their arithmetical accuracy and genuineness [in an] expedited manner”.
“Specific bank notes are being processed for their arithmetical accuracy and genuineness and the reconciliation for the same is ongoing. This information can, therefore, be shared on completion of the process and reconciliation,” the RBI said in an RTI reply.
The RTI was filed by a PTI correspondent.
When asked about the deadline for completing the counting of demoetised notes, the central bank said the notes were being processed in an “expedited manner”.Presently, 59 sophisticated Currency Verification and Processing (CVPS) machines are in operation in RBI.
In September last year the RBI said, “These machines are way superior to the note counting machines. With a view to augmenting processing capacity, the RBI is using the available machines in two shifts and has been using some machines temporarily drawn from commercial banks after suitable modifications. The RBI is also exploring other options to augment processing capacity even further.”
The Demonetisation of November 2016
The notes that were demonetised on November 8, 2016, or the specified bank notes (SBNs), were worth Rs 15.45 lakh crore. They included the Rs 500 and Rs 1,000 notes. This was the majority of the overall Rs 17.97 lakh crore that was in circulation during that period – meaning, 86% of India’s currency was rendered valueless overnight on November 8.
Prime Minister Narendra Modi, in his speech on November 8, said that the move was to curb black money, counterfeit currency and terror funding.
However, in the chaotic weeks following the announcement, with mounting deaths and outrage over poor handling by the government, the rhetoric was abruptly shifted to focus on digitisation of the economy and increasing the tax base.
The RBI was widely criticised for not disclosing information on how much black money demonetisation was able to neutralise.
Finally, when the central bank released its annual report in August last year, the findings seemed to vindicate a lot of demonetisation’s criticisms. The RBI annual report revealed, among other things, that almost all of the demonetised currency has found its way back to the central bank. The report also concludes that only 0.0007% of Rs 1,000 notes and 0.002% of old Rs 500 notes were found to be fake. (Overview of the RBI’s report can be read here.)