Currency in circulation growth falls to 4.3% from 7.7%: RBI
The Reserve Bank of India (RBI) has observed a decrease in the growth of currency in circulation (CIC), falling to 4.3% from 7.7% last year, due to the removal of Rs. 2,000 denomination banknotes. According to the RBI bulletin, a monthly publication that offers insights into local and international economic trends, the money supply (M3) experienced an 11% on-year growth as of November 3, compared to 7.8% the previous year, excluding the impact of the HDFC and HDFC Bank merger.
Over 97% of Rs 2,000 banknotes returned to banking system
On November 1, the RBI disclosed that over 97% of Rs. 2,000 banknotes have been returned to the banking system, leaving only around Rs. 10,000 crore worth of notes in public hands. As a result, the total value of Rs. 2,000 banknotes in circulation as of October 31 amounted to Rs. 0.10 lakh crore. The central bank had earlier this year announced the withdrawal of Rs. 2,000 denomination banknotes from circulation on May 19.
Reasons for withdrawal of Rs. 2,000 notes
The RBI Governor Shaktikanta Das had explained on May 24 that the decision to remove the Rs. 2,000 currency notes was taken because they were rarely used and high-denomination notes could cause additional problems. He stated, "In our surveys, we found out that Rs. 2,000 notes were not being used at all... It was being used, but not commonly used." The announcement of the withdrawal was made as part of the RBI's 'Clean Note Policy.'
