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If the latest trend in remonetisation of currency notes is any indication, as much as 70 per cent of the notes will be remonetised by February end with the Reserve Bank printing notes of varied smaller denominations as well as printing Rs 2000 notes so as to optimise the printing capacity, State Bank of India said in its latest research report.
“Printing of new notes is going on at a pace keeping in mind the less cash future and not the past and we welcome this new normal. The future belongs to money as a medium of exchange and not as a store of value,” it said.
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“Also, with petrol pump transactions amounting to Rs 4.5 lakh crore on an annualised basis, even a 20 per cent shift to digital would mean a saving of Rs 1 lakh crore. Hence normalcy will return most likely by February end,” SBI said.
As per the latest RBI data on currency in circulation, newly supplied currency till January 13 was around Rs 7 lakh crore, SBI said. This means that roughly 70 million pieces of notes of different denominations are being printed per day at the printing press. This translates into around 1.8 billion pieces per month by the printing press,” it said.
Till December 19, the RBI had said that around Rs 5.9 lakh crore of notes were remonetised, hence during the intervening period of January 13-December 19, about Rs 1 lakh crore value of notes were printed, it said. “Given the current printing press capacity, it is thus highly unlikely that the RBI has only printed Rs 500 rupee notes in entirety,’ SBI report said.
This would mean around 2.2 billion pieces of 500 rupee notes of Rs 1.1 lakh crore, an unlikely event since the printing capacity is less than 2 billion pieces in a month going by the data. Hence, the RBI has most likely also printed notes of varied smaller denominations as well as printing Rs 2000 rupee notes so as to optimise the printing capacity, SBI said.
On January 5, SBI had said in its report: “If we assume that the RBI continues to print as it is doing as of now, then by January-end, only about 67 per cent of the currency should get replaced (vis-à-vis earlier estimate at 75 per cent).” By February, at this rate, the RBI could thus print as much as 89 per cent of the total currency, it had said.
SBI then said if he the apex bank decides to shift its printing more towards smaller denomination, this number could be close to 80 per cent. The January 5 report said things will be closer to normal by February-end as opposed to predictions of the currency swap exercise-linked crisis lasting longer.
