India’s largest lender State Bank of India said on Friday banks received deposits worth Rs 53,000 crore since the government put out of circulation high-value banknotes in a bid to drain illegal wealth.
People started depositing the now-withdrawn Rs 500 and Rs 1000 notes in banks across India on Thursday. The window to do this is open till December 30.
Nearly 14 lakh crore are held in Rs 500 and Rs 1000 notes now – nearly 86% of the total value of currencies of all denominations in circulation. According to the SBI, about 3.7% of this money has come back to banks by Friday.
Experts fear that a strict scrutiny regime may force many people to destroy their illegal stash of wealth.
Going by precedents set by the previous demonitzation scheme in 1978, this could be anywhere between 1 and 10% of the total – the latter figure amounting to 1% of India’s GDP.
People have the option of going to their banks and exchanging the old currency or depositing it.
But any deposits above Rs 2.5 lakh will attract scrutiny and the taxman can take away 90% of that money in taxes and penalties if sources of income don’t match with deposits.