Demonetisation: Since 8 Nov, banks have released 10% of the value of deposited illegal notes

Indian banks have released Rs 1.36 lakh crore worth of currency since the Narendra Modi government announced demonetisation of Rs 500 and Rs 1,000 notes on 8 November

FP Staff November 22, 2016 17:15:26 IST
Demonetisation: Since 8 Nov, banks have released 10% of the value of deposited illegal notes

Since the time the Narendra Modi government announced the demonetisation of Rs 500 and Rs 1,000 notes on 8 November, Indian banks have released Rs 1.36 lakh crore worth of currency, which is 10 percent of the total money withdrawn by the government, according to a report by The Times of India.

Referring to fresh data released by the Reserve Bank of India (RBI) on Monday, the report said that the total value of currency released in the form of exchange of old notes and cash withdrawals  "is less than 10 percent of the Rs 14 lakh crore in high-denomination notes (Rs 500 and Rs 1,000) that has been rendered illegal by the government's strike against black money".

Demonetisation Since 8 Nov banks have released 10 of the value of deposited illegal notes

Representational image. PTI

However, banks have received scrapped notes worth "more than Rs 5,44,571 crore" in deposits between 10 November and 18 November, which is roughly four times the currency released since 10 November.

What this means is that banks (including RBI) now have more liquidity than the public.

The excess of liquidity with the banks has spread rumours that the RBI might soon announce an interest rate cut on the one hand to make loans more attractive to both banks and the public. There are also rumours that tax rates may fall.

Of the total currency that was released, the banks "have pumped Rs 1,03,316 crore into the system through withdrawals (through branches as well as ATMs) by account holders and another Rs 33,006 crore via exchange of old notes", The Times of India report said.

Meanwhile, queues outside ATMs and banks have not shortened even as the demonetisation move enters the 14th day on Tuesday. Over 70 people have lost their lives so far. Several people have also moved to the Supreme Court against the deaths.

According to IANS , Congress leader Sanjay Nirupam said that the prime minister should be booked for murder under Section 302 of the Indian Penal Code.

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