Demonetisation: RBI annual report this month may give details of returned notes

People queue outside a bank to exchange and deposit their old high denomination banknotes in Masuda village in the desert Indian state of Rajasthan, India, November 15, 2016. REUTERS/Himanshu Sharma - RTX2TPVT

The Reserve Bank of India’s (RBI’s) annual report that will be presented later this month may contain details about the volume and value of demonetised Rs 500 and Rs 1000 notes deposited between November 8 and December 30.

RBI governor Urjit Patel last month told the Parliamentary Standing Committee on Finance that the deposited demonetised currency notes were still being counted, making it difficult for the central bank to disclose specifics about how much of outlawed currency had come back into the banking system during the 50-day window.

Patel appeared before a Parliamentary panel, headed by Congress leader for the second time since January.

According to reply given in Rajya Sabha on December 2 by the Minister of State for Finance, Arjun Ram Meghwal, there were 17,165 million pieces of Rs 500 notes and 6,858 million pieces of Rs 1,000 notes in circulation, amounting to Rs 15.44 lakh crore in value. Finance minister Arun Jaitley had said that in value terms this was 86 per cent of the total currency in circulation valued at about Rs 17.97 lakh crore.

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The annual report of RBI, which follows a July-June financial year, contains a chapter on `Currency Management’ with specific sections on `Trends in Currency’ and `Currency Management Architecture’ among others that may include details of banned notes.

On December 13, 2016, RBI deputy governor R Gandhi had told the media that banks had garnered Rs 12.44 lakh crore in banned notes till December 10.

Last year, Prime Minister Narendra Modi in a surprise announcement outlawed Rs 500 and Rs 1000 notes, taking away their legal tender status from the midnight of November 8. This set in motion the world’s largest currency culling exercise with people given 50-days to deposit old notes in banks and post-offices by December 30.

The government has pitched the move as part of a broader strategy to clamp down on India’s bustling parallel economy where deals take place in cash. These transactions remain outside the legitimate financial system, evading tax and hoodwinking authorities by obscuring the flow and source of slush money.

Also read: Govt orders shuttering of 1 lakh dodgy companies in last 48 hours; PM signals crackdown on tax evaders

The government has been scrutinising suspicious bank transactions and data mined after November 8 has thrown up several tax evasion methods that authorities will now crack down on.

In June, the government deregistered and shuttered more than 1 lakh companies with doctored accounts, sending a stern message that the government will come down heavily on tax dodgers who refuse to come clean despite repeated warnings.

More than three lakh companies have been identified so far, based on data mined after demonetisation, whose books haves been found to be suspicious.