“I do not see any damaging impression of the word recall on the financial system in any respect,” the RBI Governor stated.

Mumbai:

Reserve Financial institution Governor Shaktikanta Das has stated that inside a month of the recall order, greater than two-thirds of the Rs 2,000 foreign money notes have returned to the system.

In a shock transfer, however as a part of the clear word coverage, the Reserve Financial institution had on Might 19 ordered the recall of the Rs 2,000 banknotes value round R 3.62 lakh crore.

On June 8, asserting the second financial coverage evaluate of the fiscal, Das had stated round Rs 1.8 lakh crore value of the Rs 2,000 notes have been returned, accounting for about 50 per cent of the notes in circulation as of March 31, of which 85 per cent had been in deposits and the remainder in alternate.

“Greater than two-thirds or Rs 2.41 lakh crore value of the Rs 3.62 lakh crore (as of March 31, 2023) of the now-recalled 2000 banknotes have come again to the system as of mid-last week,” Governor Das instructed PTI Bhasha in an interview on the RBI headquarters final week.

Of the entire cash that has come again to the system, as a lot as 85 per cent are in deposits and the remainder in foreign money exchanges, he defined.

Although the central financial institution has set September 30, 2023, because the final day for alternate/deposits, Mr Das stated the deadline will not be one thing solid in stone and that, folks needn’t rush to assert their cash.

Mr Das additionally stated the word recall may have no impression on the financial stability however refused to touch upon a latest analyst report that claimed that the transfer would result in larger client spending, which has been below stress for a while, and which in flip would assist prop the financial system up and develop over the projected 6.5 per cent.

“I do not see any damaging impression of the word recall on the financial system in any respect,” Das stated.

The central financial institution and the federal government undertaking the GDP to clip at 6.5 per cent this fiscal, with Q1 printing in at 8.1 per cent after which really fizzling out within the subsequent quarters.   After issuing the recall order on Might 19 and asking banks to open particular counters to gather the notes from the general public from Might 23, the central financial institution stated the present 2,000 denomination banknotes would proceed to be authorized tender.

Later, Das stated he was undecided whether or not he would ask the federal government to cancel the authorized tender standing of those notes after the September 30 deadline.

The 2000 banknotes had been launched in November 2016 (below Part 24(1) of The RBI Act, 1934) inside days of the November 8 demonetisation whereby the federal government had withdrawn the authorized tender standing of all the five hundred and 1000 banknotes to fulfill the foreign money necessities in an expeditious method.

About 89 per cent of the two,000 banknotes had been issued previous to March 2017 and are on the finish of their estimated life span of four-five years.

The entire worth of those banknotes in circulation has declined from Rs 6.73 lakh crore at its peak as of March 31, 2018 (37.3 per cent of notes in circulation) to Rs 3.62 lakh crore, constituting solely 10.8 per cent of the notes in circulation as of March 31, 2023.

The central financial institution’s mints had stopped printing the two,000 notes manner again in 2018-19 itself.

The clear word coverage seeks to present the general public good-quality foreign money notes and cash with higher safety features, whereas dirty notes are withdrawn from circulation.

The RBI had earlier determined to withdraw from circulation all banknotes issued previous to 2005, as they’ve fewer safety features in comparison with banknotes printed after 2005.

Nevertheless, the notes issued earlier than 2005 proceed to be authorized tender. They’ve solely been withdrawn from circulation in conformity with the usual worldwide apply of not having notes of a number of sequence in circulation on the similar time. 

(Aside from the headline, this story has not been edited by NDTV employees and is revealed from a syndicated feed.)