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15 months on, RBI still processing returned notes
Context:
- After demonetization, the Reserve Bank of India has said that Rs. 500 and Rs. 1,000 notes are still being processed for their arithmetical accuracy and genuineness.
Number of demonetised notes:
- The estimated value of specified bank notes received as on June 30, 2017 is Rs. 15.28 trillion (lakh crore).
- As to finish the counting of demonetised notes specified bank notes are being processed in an expedited manner.
New initiatives:
- The RBI will also soon have greater flexibility in terms of managing its liquidity operations with the addition of one more tool ‘Standing Deposit Facility Scheme’.
- This would provide the RBI a new tool for liquidity management, particularly in times when the money market liquidity is in excess to deal with post-demonetisation like scenario.
- Finance Minister Arun Jaitley, in his Budget, had proposed to amend the RBI Act to empower the central bank to come up with an additional instrument for liquidity management.
CRR hike:
- Post-demonetisation, the RBI ran out of securities to offer as collateral.
- It had to temporarily hike its cash reserve ratio (CRR) to force banks to park extra deposits with it.
- The CRR is the portion of deposits that banks have to compulsorily park with the RBI.
- Currently, the CRR is pegged at 4%.
