How much did it cost RBI to collect, destroy ₹500 and ₹1000 notes?

Twenty-two months after the introduction of demonetisation, the RBI is still not in a position to disclose how much it spent on collecting and destroying the old ₹500 and ₹1,000 notes.

Responding to BusinessLine’s application under the Right to Information Act (RTI) — asking what was the cost of collecting, counting, recounting, verifying and disposing of the notes — the RBI said: “The information is not available in the form in which it is sought and collating the same would disproportionally divert the resources of the Bank and hence cannot be provided in terms of Section 7(9) of the RTI Act, 2005.”

The said section stipulates that information shall ordinarily be provided in the form in which it is sought unless it disproportionately diverts the resources of the public authority, or will be detrimental to the safety or preservation of the record in question. Using the same section, the central bank ducked a question about earning from the sale of briquettes made from shredded illegal currency notes.

In fact, on August 11, 2017, a question was asked in the Lok Sabha about the expenditure incurred by the government in implementing demonetisation. “Cancellation of legal tender character of specified banknotes necessitated augmented functioning of regular activities only, no separate expenditure head was created for the purpose and hence no statistics on expenditure is available,” the government had responded.

The responses mean neither the RBI nor the government wants to make public information on the cost of the process of demonetisation excluding printing of additional notes in FY17.

There were rumours that the RBI had received ₹50 and ₹100 notes along with the demonetised currencies. To an RTI query on this, the RBI said: “Soiled notes of all denominations are continuously withdrawn from circulation and examined in the regional offices of Reserve Bank of India.”

It also said that details about the volume of soiled notes processed are available in its annual report.

“During the year, 27.7 billion pieces of banknotes were disposed as against 12.5 billion pieces last year, mainly on account of accelerated processing of SBNs (specified bank notes) of ₹500 and ₹1,000 denominations,” the Annual Report of 2017-18 said, adding that soiled bank notes disposed include 6,847 million pieces of ₹1,000 and 20,024 million pieces of ₹500 notes. These numbers were 1,514 and 3,506 respectively during 2016-17.

The government on November 8, 2016, announced withdrawing the legal tender character of banknotes in the denominations of ₹500 and ₹1,000. On that day, the total value of ₹500 and ₹1,000 notes in circulation was ₹15.41 lakh crore. Now, in its latest annual report, the total value of SBNs returned from circulation is ₹15.31 lakh crore, which is 99.3 per cent of the notes withdrawn. This does not include SBNs confiscated or seized by law enforcement agencies and also deposited in certain District Central Cooperative Banks (DCCBs), beside these notes deposited in Nepal and Bhutan.

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