RBI not verifying all withdrawn notes in currency chests

The demonetisation exercise, which has caused hardship to people for over two months now, is unlikely to provide a clear picture of the fake currency situation in the country.

This is because the ongoing verification process of withdrawn ₹500 and ₹1,000 notes by the RBI is not being conducted in a foolproof manner, according to reliable sources.

“The verification of demonetised notes, which are now being called specified bank notes (SBNs), is being conducted only on a random basis and not entirely,” a source told BusinessLine.

During the inspection, only a small number of notes are being checked, leaving almost entire consignments unchecked, both qualitatively and quantitatively.

It is learnt that, on an average, only 30 per cent of the ₹500 notes and 25 per cent of the ₹1,000 notes are being verified to detect fake notes. The process is currently on at 4,075 currency chests across the country.

So far, there has been no authentic data on the old notes returned to banks from November 9 till December 30. According to reports, around ₹14.5 lakh crore of the total recalled notes of ₹15.4 lakh crore had come back.

In a statement on January 5, the RBI said the entries done at the large number of currency chests in the country “need to be reconciled with the physical cash balances to eliminate accounting errors/possible double counts, etc”.

But the part-verification process being followed now goes against this objective and the final data on demonetised notes can never be authentic.

In over 50 circulars issued by the RBI since the announcement of demonetisation on November 8, 2016, it always identified elimination of fake currency as one of the objectives of the exercise.

As the general practice is to shred (destroy) old notes after verification, it can never arrive at the number of fake notes that were returned.

In a communication to the top management last week, the RBI staff noted that “the exponential increase of fake currency notes detected in the currency verification system post-demonetisation is alarming.”

So, it remains to be seen how the RBI will be able to arrive at authentic figures on the entire demonetisation exercise once the verification process is completed.

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