Half of India’s ₹2,000 notes are back with banks within a month of withdrawal announcement

• About ₹1.8 lakh crore of ₹2,000 banknotes have come back, said RBI governor Shaktikanta Das on Thursday.
  
  
• Broadly about 85% of the ₹2,000 banknotes are coming back as bank deposits, he added.
  
  
• The average system liquidity is in surplus mode and could increase as ₹2,000 banknotes get deposited in the banks, Das said.
  

Half of India’s ₹2,000 bank notes in circulation are now with banks, said Reserve Bank of India (RBI) on Thursday. The RBI withdrew these banknotes on May 19 but unlike the demonetisation of ₹500 and ₹1,000 notes earlier, they continue to remain legal tender, and can be exchanged or deposited at banks till September 30.

According to RBI, ₹3.62 lakh crore of ₹2000 banknotes were in circulation as of March 31.

“After the announcement, about ₹1.8 lakh crore of ₹2,000 banknotes have come back. This is roughly about 50% of the ₹2,000 banknotes, which were in circulation on 31st March...so 50% of the banknotes have come back,” said Shaktikanta Das, the governor of RBI speaking to reporters Monetary Policy Committee decision announcement, where the repo rate has been kept unchanged at 6.5%.

Das also added that they are still working out as to how much of the ₹2,000 notes has come in as deposits and how much of it was exchanged for other bank notes. “That figure needs reconciling but broadly on a provisional basis about 85% are coming back as deposits into bank accounts,” Das said.

Boost for banks

Das mentioned in his speech that the note withdrawal could aid deposits. “The average system liquidity, however, is still in surplus mode and could increase as ₹2,000 banknotes get deposited in the banks,” he said.

A Kotak Institutional Equities report meanwhile said that it expects as much as ₹1.5-2 lakh crore to make its way into banks as deposits, both directly and indirectly. Reports have said that most people are attempting to spend the notes as well by purchasing gold, consumer goods and more – which too is expected to make its way to the banks.

“Durable liquidity could increase by around ₹1 lakh crore depending on the behaviour of depositors. This should ease the credit-deposit ratio across banks,” said a report by Kotak Institutional Equities released in May.

About 64% of the LocalCircles survey respondents said that they do not hold notes in the said denomination. While 6% indicated that they have ₹1 lakh or more in ₹2,000 rupee notes. Moreover, 15% said that they have up to ₹20,000 rupees – which can be exchanged at banks with no hassle.