New Delhi: Despite the government’s advice against hoarding money, people continue to stockpile cash and have pulled out Rs 16,340 crore from banks bringing the total for the first three weeks of the month to Rs 59,520 crore, according to data released by RBI on Wednesday. In the previous three weeks, withdrawals were Rs 16,470 crore.
Currency withdrawals in the January-March quarter were at Rs 1.4 lakh crore, about 27 per cent more than in the same quarter of 2016.
The currency in circulation has risen by 33 per cent year-on-year to Rs 18.9 lakh crore as of April 20, higher than the pre-demonetisation level. But as a percentage of GDP, it remains lower prompting economists to suggest that circulation should be ramped up. On November 8, 2016, currency notes of denominations of Rs 1,000 and Rs 500, valued at Rs 15.4 lakh crore and accounting 86.9 per cent of the value of total notes in circulation, were demonetised.
This month, an unusual spurt in demand for currency led to many ATMs and banks running out of cash in UP, MP, poll-bound Karnataka and some other states even as the government and the RBI assured that there was no currency shortage.
RBI last week had said there was no shortage of currency even as it has ramped up printing of notes at all its four presses. The finance ministry too had said printing of Rs 500 notes was being increased five-fold.
“The currency supply by RBI has not kept pace with the growth in the economy and that is the reason the demand for cash has increased,” said SBI chief economist Soumya Kanti Ghosh.
According to a SBI note, RBI still had to print an additional Rs 70,000 crore to bridge the demand-supply gap.
Meanwhile, banks’ credit rose 11.52 per cent year-on-year to Rs 84,78,459 crore in the fortnight ended April 13, RBI data showed. In the same period ended April 14, 2017, banks advances were at Rs 76,01,970 crore.
In the previous fortnight ended March 30, 2018, banks loans grew by 10.32 per cent to Rs 86,50,714 crore from Rs 78,41,466 crore in the period ended March 31.
Deposits grew at 7.96 per cent to Rs 113,77,729 crore in the period ended April 13, as against Rs 105,38,304 crore in the year-ago fortnight, according to the data.
In the fortnight ended March 30, the deposits had increased by 6.66 per cent to Rs 1,14,74,989 crore from Rs 1,07,57,656 crore in the year-ago period.
In February 2018, non-food bank credit increased by 9.8 per cent on a year-on-year basis as against an increase of 3.3 per cent in February 2017.
Credit to agriculture and allied activities increased by 9 per cent in February 2018, same as in February 2017.
