Contradicting RBI governor, SBI research wing says Rs 7 lakh cr notes printed

New Delhi: New currency in circulation amounted to Rs 7 lakh crore till January 13, according to a newsletter brought out by the Group Chief Economic Adviser of the State Bank of India.

This is based on the Reserve Bank of India's update on reserve money for January 13 which said that currency in circulation till that date was Rs 9.50 lakh crore. From this, the amount of small currency notes in circulation -- and not banned on November 8, 2016 -- of Rs 2.53 lakh crore, would have been deducted to arrive at the figure of Rs 7 lakh crore (actually Rs 6.97 lakh crore).

But this stand is in contrast to what the RBI Governor, Urjit Patel, told the Parliamentary Standing Committee on Finance on Wednesday. He said that Rs 9.2 lakh crore worth of new currency was in circulation.

The figure of Rs 7 lakh crore was arrived at by Ecoflash, the newsletter put out by the research team, headed by the Group Chief Economic Adviser, Soumya Kanti Ghosh, at the SBI.

The newsletter said that "normalcy" in remonetisation will return most likely by February-end. Going by the current trend, it said, 70 per cent of the extinguished notes would be remonetised by February-end. By January-end, this percentage would touch 49.

It said that till December 19, the RBI had said that around Rs 5.9 lakh crore of notes were remonetised. Hence during the intervening period of December 19 to January 13, about 1 lakh crore value of notes were printed. Keeping in mind the capacity of the printing presses, the RBI most likely printed notes of varied smaller denominations as well as Rs 2,000 notes (and Rs 500), so as to optimise the printing capacity.