The currency with the public contracted by Rs 83,242 crore in the fortnight ended June 02 according to the latest data published in the weekly statistical supplement of the Reserve Bank of India.
Significantly, June 02 is the first Friday report that captures the movement of currencies from the markets to the banking system and vice-versa.
The governor had indicated that 50% of the procedures were completed by June 7 and that 85% of the tickets had been deposited. This would imply that the currency should have been reduced by Rs 1.5 lakh crore,” said Gaura Sengupta, Indian economist at IDFC First Bank. “The actual drop is smaller, indicating that some of the notes deposited would have been simultaneously withdrawn as well.”
The central bank on May 21 earlier this year decided to withdraw banknotes denominated in ₹2000 from circulation; it has been observed that it is not used regularly for transactions. In addition, the stock of banknotes in other denominations continues to be sufficient to meet the currency needs of the public.
The central bank’s move also added to excess liquidity in the system which is estimated at nearly Rs one lakh crore, according to market analysts. “From a liquidity perspective, the substantial increase in liquidity in June was driven first by a resumption of government spending, followed by the impact of the withdrawal of the 2000 note,” Sengupta said. 1) of the RBI Act 1934 to quickly meet the currency needs of the economy after the removal from legal tender of all ₹500 and ₹1000 notes in circulation at that time.