How many old notes did people deposit? RBI says it is still counting them

Old Rs 500 and Rs 1,000 notes are now called specified bank notes (SBN) by RBI

The Reserve Bank of India (RBI) on Thursday clarified it was still counting how many old notes have been returned to the banking system, to eliminate double counting. Therefore, it said the numbers being quoted should not be construed as verified. RBI is reconciling the numbers provided by banks against the actual cash stashed in currency chests. 

Media reports suggested that anything between Rs 14.5 lakh crore and Rs 15 lakh crore may have come back to the banking system, against Rs 15.4 lakh crore worth of old Rs 500 and Rs 1,000 notes.

These notes are now called specified bank notes (SBN) by RBI. 

"Now that the scheme has come to an end on December 30, 2016, these figures would need to be reconciled with the physical cash balances to eliminate accounting errors/possible double counts etc," a statement on the RBI website said. 

Till then, "Any estimate may not indicate the actual numbers of the SBNs that have been returned," RBI noted.  

The clarification has confused economists. 

"If RBI is now saying they need to recheck the figures, where did the earlier numbers originate from?" asked a senior economist with a bank. 

RBI's Deputy Governor R Gandhi had provided the numbers in a press conference on December 13. In that conference, Gandhi had said SBNs of Rs 500 and Rs 1,000 returned to RBI and currency chests amounted to Rs 12.44 lakh crore as on December 10, 2016. 

In that period, RBI had issued to the public through the banks and their branches a total of 21.8 billion pieces of notes of various denominations, of which 20.1 billion pieces belonged to small denominations of Rs 10, Rs 20, Rs 50 and Rs 100 notes and 1.7 billion belonged to higher denominations of Rs 2,000 and Rs 500, Gandhi had said. 

If RBI's figure of Rs 12.44 lakh crore as on December 10 was correct, then recent media estimates could be closer to the reality, given that there's still 20 days to go for the last leg of the demonetisation drive to end, economists say. 

The government, on its part, has found it difficult to face the fact that most of the demonetised money has come back to the banking system. Finance Minister Arun Jaitley had hoped that a substantial portion of the demonetised amount won't come back to banks and, therefore, this can be extinguished from RBI's liability side and transferred back to the government. The figures being touted was about Rs 3 lakh crore in government gains through unreturned money. 

Predictably, economic affairs secretary asked the RBI to recheck the figures that it provided to eliminate possibilities of double counting. “In the figures RBI announced, there are a lot of areas where we feel there could be double counting. We have identified those and requested RBI and banks to double-check,” Das told journalists at a press conference in mid-December. 

Before that, State Bank of India chairman Arundhati Bhattacharya had hinted at a possible double counting on RBI's part as both cooperative banks that maintain accounts with banks and banks themselves reported their deposit numbers individually to RBI and the government. 

After the figures provided on December 13, RBI did not come up with any update on how much money has been returned. However, it periodically gave updates on how much money was remonetised, latest being Rs 5,92,613 crore till December 19. 

RBI said this time, the figures provided will be firm. "RBI is taking all steps to complete the process expeditiously so as to release firm figures of SBNs received at an early date."