Unusual cash deposits of Rs 1.7 lakh crore made during demonetisation, reveals RBI research paper
The note ban was said to be a move to curb black money and corruption.
Unusual cash deposits around Rs 1.7 lakh crore were made in “less-active specific accounts” during the demonetisation period, a research paper posted on the Reserve Bank of India’s website on Friday revealed. The paper, ‘Demonetisation and Bank Deposit Growth’, said that these deposits were made in specific accounts which are usually “less active”.
The paper added that during demonetisation the number of bank accounts opened under Pradhan Mantri Jan Dhan Yojana also increased, as 1.8 crore new accounts were opened and the money deposited in Jan Dhan accounts surged by 48% between November 8, 2016 and January 25, 2017.
“Excess deposit growth in the banking system during the demonetisation period (November 11, 2016, to December 30, 2016) works out to 4%-4.7%,” the paper said while referring to the deposit growth over and above the usual trend of growth in deposits in current and savings accounts.
It added that if one accounts for the period up to mid-February 2017 to allow for some surge in deposits to reduce, banks still have more 3.3%-4.2% cash as deposits over and above the normal assumed growth rate of about 10%.
Bhupal Singh and Indrajit Roy, who are directors in the Monetary Policy Department and Department of Statistics and Information Management, authored the paper.
On November 8, Prime Minister Narendra Modi had announced that currency notes of Rs. 500 and Rs 1,000 denomination would not be valid. The move was said to be taken to crack down on black money and corruption.