Note ban helped reduce incremental growth in currency by Rs 3 trn: Govt

The government on Tuesday said demonetisation followed by digitalisation has succeeded in reducing incremental growth in currency in circulation by over Rs 3 lakh crore.

In a written reply to a question in the Rajya Sabha, Finance Minister Nirmala Sitharaman said the notes in circulation (NIC) as on November 4, 2016 were worth Rs 17,74,187 crore which have increased to Rs 22,35,648 crore as on December 2, 2019.

NIC had grown at an average rate of 14.51 per cent year-on-year since October 2014 till October 2016.

At this rate, NIC would have increased to Rs 25,40,253 crore as on December 2, 2019.

"Demonetisation, followed by digitalisation and reduction of cash use in informal economy has succeeded in reducing NIC by as much as Rs 3,04,605 crore," the minister said.

The government had banned Rs 1,000 and Rs 500 denomination notes on November 8, 2016 with an aim to check black money, eliminate Fake Indian Currency Notes (FICN), among others.

Citing RBI data, the minister further said 7,62,072 counterfeit notes were detected in the banking system during 2016-17, 5,22,783 in 2017-18 and 3,17,389 counterfeit notes in 2018-19.

Hence, demonetisation resulted in curbing the counterfeit currency, Sitharaman added.

Also, digital transactions have been steadily increasing since last few years, she said. The total number of transactions increased from 2,071 crore in 2017-18 to 3,134 crore in 2018-19, which corresponds to a growth rate of 51 per cent.

To another question, Sitharaman said the government has made budgetary provision of Rs 70,000 crore for recapitalisation of public sector banks in 2019-20 and has so far infused Rs 60,314 crore.

All public sector banks are above the minimum regulatory capital ratios for common equity tier-1 (CET-1) and tier-1 capital, she said.