Lately, it has come to the notice of the Reserve Bank of India that people are hoarding cash with them because in the recent times withdrawals have outpaced the spending. Since it takes around few months for the withdrawn money to get re circulated in the market, therefore the weekly money reserves donot explain the exact scenario of hoarding but it definitely does give an idea of the ongoing trend.
As per the statistics people withdrew a total of Rs. 59,520 crores till April 20, 2018. In the three weeks before this, total withdrawals summed up to Rs.16,470 crore. The approximate currency in circulation was equal to Rs. 18.9 lakh crore. This makes upto 8.9 per cent up since the beginning of last October when withdrawals began to increase. The situation became noticeable only this month when the ATM’s in various states such as Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh and Bihar started running out of cash. Ever since demonetisation happened recently, government has been making efforts to promote digital transactions. The recent shortage detected in the availability of Rs. 2000 notes has forced the government to suspect the general public of money hoarding. There could be various reasons behind it such as concerns over the health of Indian banks, GST evasion, preparations for campaign spending ahead of an election in the southern state Karnataka etc. As per the latest report, RBI still has to print an additional Rs. 70,000 billion crore to cover the gap between demand and supply. Neeraj Vyas, SBI’s chief operating officer stated that the situation shall restore back to normal in a few days.
By: Anuja Arora