RBI says doesn't know exact number of scrapped notes

More than 72 days after demonetisation, the Reserve Bank of India (RBI) has said it still does not know the "exact number" of junked currency notes that were in circulation and it is still "reconciling" the number of notes that were deposited back.
In a written submission to Parliament's Public Accounts Committee (PAC), the central bank said: "The exact number of Specified Bank Notes (SBNs) withdrawn from circulation is being worked out."
The response came even as Minister of State for Finance Arjun Ram Meghwal had on December 2 told Parliament in a written response that currency notes worth Rs 15.44 lakh crore (17165 million pieces of 500 notes and 6858 million pieces of 1000 notes) were in circulation on November 8.

RBI Governor Urjit Patel along with Deputy Governor R Gandhi and other senior functionaries appeared before the PAC, headed by former union minister and senior Congress leader K V Thomas, for oral evidence on 'Review of Monetary Policy'.
Sources said the RBI was asked about the "total number" of the scrapped currency deposited in banks after November 8.
In its reply, RBI is understood to have informed PAC that the exchange of the currency took place at thousands of bank branches and post offices over the 50 days demonetisation period. The collected notes were deposited in 4,000 currency chests.

"It (number of notes) is pending finalisation as of now, as physical verification and reconciliation are underway," said sources quoting the RBI's reply.

RBI informed the panel that its Board meeting which recommended withdrawal of legal tender of Rs 500/1000 notes was held on November 8 at 5.30 pm.
Prime Minister Narendra Modi announced about the demonetisation in his address to the nation at 8 pm on the same day after Cabinet's approval.
The Members of Parliament in the PAC were also informed by the RBI that the matter related to demonetisation was under discussion between the government and the RBI for "some months", following which the proposal was placed before the Central Board of RBI on November 8 for consideration.
The Board recommended the proposal to the government.

The Board meeting was attended by Governor Patel, two Deputy Governors (R Gandhi and S S Mundra), and five Directors of RBI -- Nachiket Mor, Bharat N Doshi, Sudhir Mankad, Shaktikanta Das and Anjuly Chib Duggal.
Sources said another director N S Vishwanathan (Deputy Governor) did not attend the meeting as he stayed back in Mumbai for "strategic reasons" to brief the bankers first hand immediately after the decision on demonetisation was taken.
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In its submission to PAC, RBI has also said that it had indicated to the government that there could be possible inconvenience to the public as replacement of currency would take time.

However, it was felt that demonetisation would help in dealing with problem of counterfeit currency and push people to use digital mode of payments.
It was also pointed out that legal tender character of old Rs 500/1000 notes was cancelled by the government with effect from mid-night of November 8, 2016 under Section 26 (2) of the RBI Act on the recommendation of the RBI's Board.
While the conduct of the monetary policy is a function of the RBI, but it is different from the action taken by the government for withdrawal legal tender character of the notes.