CIC growth down 4.2% because of Rs. 2,000 note withdrawal
The Reserve Bank of India (RBI) has revealed in its monthly bulletin that the rise in currency in circulation (CIC) has dropped to 4% from 8.2%. This is because of the withdrawal of Rs. 2,000 notes in the country. The central bank also disclosed that around 93% of these notes have returned to the banking system, primarily as deposits, as of August 31. The remaining notes of Rs. 2,000 in circulation stood at Rs. 0.24 lakh crore.
RBI urges public to exchange Rs. 2,000 notes
The RBI bulletin further stated that the total worth of Rs. 2,000 banknotes stood at Rs. 3.32 lakh crore. Of the total notes returned to the banking system, about 87% were in the form of deposits and the remaining 13% were exchanged with bills of lower denomination. The central bank has urged the public to utilize the remaining time to exchange or deposit the Rs. 2,000 notes.
Money supply growth affected by note withdrawal
The withdrawal of Rs. 2,000 notes has also affected money supply growth in India. According to the RBI bulletin, money supply (M3) growth as of August 25 was higher at 10.8% YoY than 8.9% in the corresponding period in 2022. The aggregate deposits with banks, the biggest component of M3, increased by 11.8% (9.0% a year ago). Scheduled Commercial Banks' (SCBs) credit growth clocked a slight moderation amid ongoing deposit mobilization efforts by the banking sector.
