oppn parties Is Double Counting Creating Bank Deposit Confusion?

News Snippets

  • Crude prices fall sharply as Saudi Arabia assures normal production in a few weeks. Prices fall by 5.4% to $65.30 per barrel
  • Sensex tumbles 700 points over fears that rising crude prices will deal a body blow to the tottering Indian economy
  • As Rajeev Kumar fails to appear before the CBI despite several notices, the agency forms a special team to locate and apprehend him
  • S Jaishankar says Pakistan is not a normal neighbour and its behaviour is a "set of aberrations"
  • External Affairs Minister S Jaishankar says PoK in Indian territory and the country hopes to have physical jurisdiction over it one day
  • Barasat Sessions court near Kolkata rejects Rajeev Kumar anticipatory bail application citing lack of jurisdiction as the reason
  • PM Modi celebrates his birthday with Narmada aarti and later has lunch with his mother.
  • All 6 Bahujan Samaj Party MLAs merge with the Congress in Rajasthan
  • Bengal CM Mamata Banerjee to meet PM Modi on Wednesday, state issues on the agenda
  • Pakistan to open Kartarpur corridor on Nov 9
  • Rajeev Kumar, ex-police commissioner of Kolkata and wanted for questioning in the Sarada scam does not appear before the CBI despite the state administration requesting him to do so
  • Supreme Court asks the Centre to restore normalcy in J&K but keeping national interest in mind
  • As Trump accepts the invitation to attend a programme in Houston with PM Modi, India rushes to settle trade issues with US
  • After drone attack on Aramco's Suadi Arabia facility, oil prices jump 19% in intra-day trading causing worries for India
  • Imran Khan raises nuclear war bogey again, says if Pakistan loses a conventional war, it might fight till the end with its nuclear arsenal
Sunni Wakf Board and Nirvani Akhara write to the Supreme Court for a negotiated settlement to the Ayodhya dispute
oppn parties
Is Double Counting Creating Bank Deposit Confusion?

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.
There is a lot of confusion regarding how much money, in the form of banned currency notes, has come back in the banking system. The RBI yesterday said that close to Rs 11.5 lakh crore had been swapped till Dec 6. Even the Revenue Secretary, Hasmukh Adhia, is reported to have said that the entire currency is likely to come back. But the SBI begs to differ.It says that the figure might have been misreported due to double counting.

Research by SBI has discovered a big mistake in its banned currency notes data reporting. The bank said that it gets interbank deposits, has accounts of post offices that are also authorized to take banned currency notes and has not factored in deposits of new currency notes which have started coming in while reporting deposit data. This has led to “double counting” in some cases and hence the Rs 11.5 lakh crore figure is inflated.

This, the bank feels, might skew the figure negatively by 15 to 20%. If this is correct, then the total actual deposit might be in the range of Rs 9.2 to Rs 9.78 lakh crore. This is a huge gap of nearly Rs 2 lakh crore and can make a big difference. If we take the deposits as a trend and visualize that it will continue till Dec 30 in the same manner and the whole of Rs 15 lakh crore is reported as deposited, there will be a gap of nearly Rs 3 lakh crore due to the double counting effect. This means that a huge amount of old currency is likely to be extinguished, as per earlier expectations.

Although the RBI has clearly stated that the RBI’s liability will not be extinguished by merely pulling out notes from circulation and there will be no special dividend of the amount to the government, the mere fact that such a big amount will be scrapped and not be payable anymore will give a huge boost to the fight against black money. It will also achieve one of the initially stated objectives of demonetization.