The RBI has said, in a quick meeting note, that old notes worth Rs. 12.44 lakh crore have been returned to banks between November 10 and December 10. Here’s the press conference recording (from the RBI site):
That’s more than 80% of the total number of “demonetized” notes of Rs. 500 and Rs. 1000 that existed before this. Like we have said: all these notes are coming back.
Also, about Rs. 461,000 cr. worth notes have been given to the public. That is about 1/3rd the total notes that went out. This probably means that we will take another two months to return to normal, assuming currency withdrawal restrictions continue at the current level.
Currency drawing limits are currently about Rs. 24,000 per week for individuals, or Rs. 50,000 per week if you are a business.
It is likely to take a little longer to normalize as people continue to hoard currency as much as they can, since there is a shortage. So we will require to print more than was earlier available, to satisfy demand.
Meanwhile, bank credit has fallen off a cliff. The growth, as of November 25, is down to 6.63%, the lowest since 1994. In two weeks after November 8, bank credit fell by Rs. 61,000 cr. – some of which would be because people repaid loans with cash.
However, the real impact will be visible only in December and onward, as knee jerk reactions to the move would’ve been bigger earlier. Watch this space.