In its annual report, RBI on Wednesday said that 99.3 percent of the money in circulation in financial year 2016-17 has come back into the banking system post demonetisation.
The total value of Rs 500 and Rs 1000 notes in circulation was Rs 15.41 lakh crore, while the total value of demonetised notes returned from circulation is Rs 15.310 lakh crore, RBI wrote in its annual report.
The central bank said it has completed the verification and processing of the specified bank notes.
Here are the key points from the report:
On counterfeit notes
About 522,783 pieces of counterfeit notes have been detected in the banking system during FY18, down by 31.4 percent from the previous year, the report said.
In FY18, counterfeit notes detected in Rs 500 denomination has decreased by 59.7 percent, while 59.6 percent decline has been seen in Rs 1,000 denomination.
A 35 percent rise of counterfeit notes was seen in Rs 100 denomination notes, while it spiked to 154.3 percent in the Rs 50 denomination.
On monetary policy
Conduct of monetary policy will continue to be guided by the objective of achieving 4 percent target for CPI inflation while supporting growth, the central bank said in its report.
The bank said that even though exports have gathered momentum in Q1 FY19, worsening global trade environment may impinge upon external demand.
Changing demand-supply dynamics in international crude oil market may impact heavily on India’s trade deficit, it further added.
On banking system
RBI said that it has taken several initiatives to secure soundness of the banking system which is expected to reach critical mass during the financial year 2018-19.
The new framework for resolution of stressed assets is more outcome-oriented, the report said, adding that it provides considerable flexibility for banks to determine the minutiae of the restructuring process.
According to RBI, an uptick in the credit growth is seen helped by the amendments brought in the Insolvency and Bankruptcy Code.
The infrastructure sector holds the key to boost the economic growth, the report said.
The central bank pointed that reasonable success has been achieved in the transportation space and it is worthy of emulation in other areas.
The central bank pointed that the government is designing a comprehensive strategy to bring employment to the core of the development strategy.The report studies that over the medium-term, the pace and quality of the growth will be anchored by progress on the unfinished agenda of structural reforms- completion of the banking and corporate resolution process, etc.