oppn parties Is Double Counting Creating Bank Deposit Confusion?

News Snippets

  • Supreme Court asks journalists to be responsible and publish only the official version of news after it was brought to its notice that migrant exodus started after the 'fake' news that the lockdown will be extended to three months
  • Small saving rates slashed by the government by 140 basis points
  • The Centre says that the exodus of the migrants was stopped to save villages and prevent community transmission
  • The Centre says March 31 will remain the closing date for FY 2019-2020 and no change will be made for Covid-19 disruption
  • Tablighi Jamaat fiasco puts several states on high alert, attendees and their contacts being traced
  • Stock markets recover on the last day of the financial year, but the sentiment remains weak
  • The government says Covid-19 is still in local transmission stage in India
  • Government scotches rumours of extending the lockdown beyond April14. Says no such plan
  • Centre asks states to give shelter and food to migrant workers to stop them from taking to the streets
  • RBI cuts repo rate by 75 bps, the steepest in 10 years
  • Centre writes to states regarding laxity in monitoring people who had arrived from abroad between January and March
  • Kerala reports a spurt in new cases
  • With 124 fresh cases on Friday, the number of reported cases in India stand at 854
  • Five of a family, including a 9-month-old-baby test positive for Covid-19 in Nadia district in West Bengal on Friday
  • The Pakistani army is reportedly forcibly moving all Covid-19 patients to PoK and Gilgit
Total count crosses 1600 in India with 52 deaths and 146 recoveries on Tuesday, spurt in cases in Maharashtra and Tamil Nadu
oppn parties
Is Double Counting Creating Bank Deposit Confusion?

By Sunil Garodia
First publised on 2016-12-08 09:08:12

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.