Demonetisation has caused the net loss to RBI's seigniorage the profit accruing from currency issuances and liquidity operations besides increasing the cost of printing notes, says an SBI Research report. On November 8 last year, the government had banned old Rs 500 and Rs 1,000 notes in an attempt to weed out black money in the country.
The old notes were allowed to be deposited in banks, with unusual deposits coming under income tax scrutiny. "The demonetization exercise has resulted in net loss of seigniorage to the RBI," SBI's research report Ecowrap said. "In the current case, there is a seigniorage loss, as the face value of Rs 15.28 trillion of Rs 17.1 trillion has been printed," it said. Where Do You Need To Quote PAN Number Post Demonetization?
The report further said that "the cost of printing notes and coins has increased during this year." In its Annual Report for 2016-17, RBI has said that post- demonetization it has spent Rs 7,965 crore on printing new Rs 500 and Rs 2,000 and other denomination notes, more than double the Rs 3,421 crore spent in the previous year. The banned notes formed 86 per cent of the currency in circulation at that time.
Holders of old notes were given a 50-day window to deposit them in banks. The estimated value of Specified Bank Notes (SBNs) received as on June 30, 2017, is Rs 15.28 trillion (Rs 15.28 lakh crore) out of Rs 15.44 trillion demonetized currency. The net transfer of profits to the Union Government, as a result, have fallen drastically during this year by 53.5 per cent.
The report further said that the number of suspicious transaction reports by Banks/FIs/Intermediaries also increased by 345 per cent and this in turn "could possibly lead to increase in future tax revenues." "This coupled with implementation of GST will help in better fiscal realization at a future date," the report added.