Cash with public more than pre-DeMo levels, RBI fears hoarding
June 10, 2018 11:02
Currency with the public has reached a record high level of over Rs 18.5 lakh crore, more than double from a low of about Rs 7.8 lakh crore it had hit post-demonetisation decision in late 2016, as per Reserve Bank of India data.
At the same time, the total currency put in circulation by the Reserve Bank has also more than doubled to over Rs 19.3 lakh crore -- from a low of about Rs 8.9 lakh crore post-demonetisation.
Currency with the public is arrived at after deducting cash with banks from total currency in circulation.
This high level of currency available with the public is in sharp contrast to the reported cash crunch in various parts of the country a few months ago. There has been a fear that hoarding or accumulation of large amounts of cash for various reasons could have triggered an artificial currency crunch.
The figures for both 'currency with the public' and 'currency in circulation' have also exceeded the levels seen before the government's demonetisation decision on November 8, 2016, that saw nearly 86 per cent of the currency in circulation at that time being invalidated overnight by scrapping the then Rs 500/1,000 banknotes.
The public was given time to deposit the invalidated notes in banks, which saw nearly 99 per cent of banned notes coming back into the system.
As per the RBI's latest disclosure in this regard, people had returned Rs 15.28 lakh crore as on June 30, 2017, of the Rs 15.44 lakh crore banned currency, or 98.96 per cent, of the scrapped notes to the banking system.
Since then, the RBI has introduced new denominations of Rs 2,000 and Rs 200, among others, besides a new Rs 500 note. After the recent cash crunch, the government had announced that printing of Rs 500 notes would be stepped up.
While the RBI is yet to announce its final word on processing and verification of all the returned notes, the latest 'money supply' data from the central bank puts the "currency with the public" at over Rs 18.5 lakh crore as on May 25, 2018 -- up more than 31 per cent from year-ago level.
This is an over two-fold jump from Rs 7.8 lakh crore as on December 9, 2016 -- the lowest level it had seen after the announcement of the demonetisation decision as people rushed to deposit the scrapped notes with banks and the RBI.
Prior to demonetisation, the currency with the public stood at about Rs 17 lakh crore.
In terms of 'currency in circulation', the RBI puts the latest figure at over Rs 19.3 lakh crore as on June 1, 2018 -- again a jump of about 30 per cent from the year-ago level, according to the 'reserve money' data released by the central bank.
This also marks an over two-fold rise from a low of Rs 8.9 lakh crore as on January 6, 2017 -- the lowest level it saw post-demonetisation. The current level of currency in circulation is also above the pre-demonetisation figure of Rs 17.9 lakh crore as on November 5, 2016.
The RBI publishes the figures for currency in circulation on a weekly basis, while the currency with the public comes out every fortnight.
An analysis of historic data shows that the currency with the public stood at about Rs 13 lakh crore before the Modi government took charge in May 2014. -- PTI
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