NEW DELHI: The growth in currency in circulation decelerated to 3.7% for the week ended Feb. 9 from 8.2% a year ago, reflecting the impact of the decision of the Reserve Bank of India to withdraw Rs 2,000 banknotes.
Currency-in-circulation refers to notes and coins in circulation, while currency with the public comprises notes and coins in circulation minus cash with banks.
As per the RBI, commercial banks have reported double-digit growth in deposits in January, which too can be attributed to withdrawal of Rs 2,000 currency notes.
The growth of Reserve Money, as per the RBI data, decelerated to 5.8% as on Feb. 9, 2024 from 11.2% a year ago (8.8% adjusted for the first-round impact of change in Cash Reserve Ratio. Components of RM include CiC, banks’ deposits with the central bank.
The growth in CiC , the largest component of RM, decelerated to 3.7% from 8.2% a year ago, reflecting the withdrawal of Rs 2,000 banknotes, according to the RBI. On May 19, 2023, RBI announced withdrawal of Rs 2,000 denomination banknotes from circulation.
As on Jan 31, nearly 97.5% of the Rs 2,000 banknotes were returned to the banking system, and only about Rs 8,897 cr worth of such notes are still with the public.