2023-06-16 14:27:38
The currency with the public contracted by Rs 83242 crore during the fortnight ended June 02 according to the latest data released in the weekly statistical supplement by the Reserve Bank of India.
Significantly June 02 is the first reporting Friday which captures the currency movement from the markets to the banking system and vice-versa
“ The governor had indicated that 50% of the process had been completed by June 7 and 85% of the notes had been deposited. This would imply that currency should have reduced by Rs 1.5 lakh crore” said Gaura Sengupta, India economist at IDFC First Bank. “ The actual decline is lower, which indicates that part of the deposited notes would have been simultaneously withdrawn also”.
The central bank, on May 21 earlier this year decided to withdraw the ₹2000 denomination banknotes from circulation; it was observed that it is not used regularly for transactions. Besides, the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public.
The central bank’s move has also added to the surplus liquidity in the system which is estimated at close to Rs one lakh crore, according to market analysts. “From a liquidity standpoint, the substantial increase in liquidity in June was driven firstly by a pickup in government expenditure , followed by the impact of the 2000 note withdrawal” said Sengupta.The ₹2000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934 to meet the currency requirements of the economy in an expeditious manner following the withdrawal of legal tender status of all ₹500 and ₹1000 banknotes in circulation at that time.
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