Almost $170 Billion In Old Notes Deposited In Banks, Says Reserve Bank

The Reserve Bank of India today said it has supplied Rs 4 lakh crore in new notes to banks, dismissing criticism that the decision to ban 500 and 1000 rupee notes last month was taken in haste. 

While announcing its monetary policy, in which it surprised by keeping key lending rates unchanged, the central bank promised a continuous supply of new currency notes asking people not to hoard notes. 

Demonetisation, it said, would result in short-run disruptions in cash-intensive sectors like retail, hotels, restaurants and transportation.

"The demonetisation decision was not taken in haste but after detailed deliberations...The consequences were taken on board," said RBI governor Urijit Patel, stating that the central bank was conscious of the problems caused to people by cash crunch after the notes ban, aimed at unearthing black or undeclared money. He said the RBI had put in place "all dispensations" to ensure minimum disruption.

The central bank said almost Rs 11.55 lakh crore in old notes has been deposited back in the system. People have till December 30 to deposit old 500 and 1000 rupee notes in their bank accounts. 

The withdrawal of old notes could result in temporary reduction in inflation by 10 to 15 basis points in the third quarter, RBI Deputy Governor R Gandhi said. 
 
Prime Minister Narendra Modi had in a sudden announcement on NOvemebr 8 withdrawn high value old notes, which took out 86 per cent of the money in circulation. Opposition parties have since disruoted Parliament, attacking the government over the cash crunch that has followed, accusing it of not thinking through demonetisation and causing extreme hardship to the people.

The government has said that it has the support of the people, who  understand that the inconvenience is temporary and that the notes ban will lead to long-term benefits.

An estimated Rs 15.5 lakh crore cash was wiped out from the economy in old high value currency of 500 and 1000 rupee banknotes.