Cash with public at a record high

Currency with the public has reached a record high of over Rs.18.5 lakh crore, more than double the low of Rs.7.8 lakh crore it had hit after demonetisation in late 2016.

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. As a percentage of GDP, however, the proportion remains much lower than the pre-demonetisation level. 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 contrast to the reported cash crunch in various parts of the country a few months ago. Hoarding of cash was then cited as a reason that 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% 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% 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%, 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.

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