99% of Banned Rs.500 and Rs.1000 currency notes returned

On Dec 1^st, 2016, there was an article by IANS, the headline of which was ‘Demonetisation’s rude shock: There may not be any black money’ and it goes on to argue that 8,44,962 crores have been deposited with the banks from November 10, 2016 to November 27, 2016., in Rs.500 and Rs1000 banned notes.

On August 30, 2017, Reserve Bank of India’s annual report gives the following figures on demonetisation and the total money deposited with it.

Following are the excerpts from the annual report:

The notes issued decreased by 11.79 per cent from ₹17,077.16 billion as on June 30, 2016 to ₹15,063.31 billion as on June 30, 2017. The decrease is the net impact of withdrawal from circulation of the old ₹500 and ₹1000 notes issued till November 08, 2016 and subsequent remonetisation efforts made by the Reserve Bank.

The report further states that:

Until June 30, 2017, SBNs (Specified Bank notes) were received by the Reserve Bank either directly or from bank branches/post offices through the currency chest mechanism. Some of these SBNs are still lying in the currency chests. Subject to future corrections based on verification process when completed, the estimated value of SBNs received as on June 30, 2017 is ₹15.28 trillion.

Moreover, vide notification no G.S.R. 611 (E) dated June 20, 2017, Government of India allowed District Central Cooperative Banks (DCCBs) to deposit SBNs accepted by them from their customers within the period of 10th November to 14th November, 2016.

Reserve Bank is in discussion with Government of India with regard to the acceptance or otherwise of SBNs held by citizens/Financial Institutions in Nepal.

If one were to add the total SBNs received and counted, SBNs received still to be counted, SBNs from Cooperative banks, and those from Nepal, the total amount would just about close the gap of 11.79%.
Under the heading of ‘Expenditure’, in ‘Analysis of Income and Expenditure’, the annual report states:

 iv) Printing of notes

Expenditure incurred on printing of notes during 2016-17 was ₹79.65 billion as compared to ₹34.21 billion in 2015-16.

The increase was mainly on account of following reasons:

a. Supply of notes during the year at 29,043 million pieces was 37 per cent higher than the total supply during previous year (21,195 million pieces). Supply of higher denomination notes during 2016- 17 was 13,702 million pieces as against 5,268 million pieces supplied in 2015- 16, higher by 160 per cent.

b. In the wake of withdrawal of SBNs, there was an increase in the number of remittances in our remonetisation efforts resulting in higher freight and forwarding expenses. For urgent supply of notes across the country, notes were also remitted by air resulting in increased expense on freight charges.

c. Reimbursement of cost for finished banknotes, work in progress, raw materials, etc. as the printing presses had to discontinue printing of ₹500 and ₹1000 denomination banknotes which were withdrawn in November 2016.

If one were to add the expenditure incurred towards printing of the new currency notes of Rs.500 and Rs.2000, and distributing them in the limited period, to the total amount, RBI could have taken a loss, and the headline on Dec 1^st, 2016, ‘Demonetization rude shock: There may not be any black money’, may have come true.