The Reserve Bank of India said on Wednesday that it will not pass on as dividend to the government, the amount of money that does not come back into the system once the deadline of the demonetisation exercise expires on December 30, 2016.
Speaking to reporters at the RBI’s fifth bi-monthly monetary policy, governor Urjit Patel said the central bank has no plan to pass on the cancelled amount as dividend. “There is no such plan. That question does not arise as there is no implication on RBI’s balance sheet as of now,” Patel said.
RBI on Wednesday said about Rs 11.55 lakh crore has come back into the system in the form of old notes. Considering the government’s estimate that old notes the tune of Rs 14 lakh crore were circulating in the system, simple math says that about Rs 2.45 lakh crore in old notes have yet to flow back as on December 7.
RBI’s stance underscores the central bank’s autonomy in deciding how it would treat the cancelled amount, as it was widely expected that the government would be paid dividend.
In fact, brokerages and research houses had made estimates of about Rs 3 lakh crore that would have been cancelled – in the form of money not deposited for fear of criminal prosecution – after December 31.
Since this cancellation would have reduced RBI’s liabilities to that extent, it would imply a surplus, and banking experts had said this amount could be transferred to boost the government’s non-tax revenue.