Talking to myrepublica.com, Aswini Kumar Thakur, chief of Currency Management Department of the NRB, acknowledged that there has been a shortage of higher denomination notes due to multiple reasons, including delay in supply of fresh notes and higher demand for notes than projected.
Disappearance of huge amount from circulation blamed for shortage
However, he was quick to add that ongoing shortage will vanish within a week. "We are getting a huge fresh supplies of 500-rupee by the end of this week and the notes will go into circulation by Sunday, ending the present supply constraints," said Thakur.
Thakur also said the central bank has been adopting all possible means to deal with the unexpected problems and added that the NRB has also urged all the financial institutions to cooperate with the central bank by managing essential supplies of notes till Sunday.
NRB officials estimate that high denomination notes worth Rs 10 -11 billion has disappeared from circulation due to a provision of Asset (Money) Laundering Prevention Act that track details of transactions worth Rs 1 million made through banking system.
With a four-month delay, the central bank is expecting a fresh supply of 500-rupee notes printed by a French company worth Rs 20 billion by end of this week. "The notes have already been offloaded at Kolkata port and are on the way to Nepal," he said and estimated that an addition supply of 500-rupee notes worth four billion supplies will end present shortage of notes.
Thakur, however, said that there is no shortage of notes of denominations other than 1000 and 500 rupee notes. "Yes, there has been pressure in other denominations because of the shortage of high denominations notes," he said.
According to NRB officials, the central bank has been able to supply only 20 percent of the demand as a result of which most of the financial institutions have faced a severe shortage of notes.
Central bank officials said that they have not been able to trace around Rs 11 billion of the total Rs 141 billion worth of money in circulation. "In our case the fresh notes come back to central bank generally after three weeks of their issuance for the first sorting," said the official and added that the central bank is receiving only 10 percent of the released amount. "It is matter for a study where the remaining 90 percent is going," he said.
Some of the officials suspected that a provision of Asset (Money) Laundering Prevention Act, 2008 that compels financial institutions to provide transaction details worth one million rupees to Financial Information Center of the central bank within seven days might have instigated some depositors to withdraw their deposits from banks.
There are possibilities that the provision, which came into implementation from August 17, might have instigated some shady depositors to withdraw deposits and store them in their houses and bank lockers, said the officials.
Thakur also said that once the central bank gets new supplies of notes, there will be no problem in meeting with the additional festival demand of notes that generally stands at Rs 15 billion.
prem@myrepublica.com
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