What did the report by Free Press Journal say about the missing ₹500 notes?

A report by Free Press Journal published recently stated that ₹88,032.5 crore of ₹500 notes were missing.

It claimed that the mints had issued 8,810.65 million pieces of the newly designed ₹500 note, according to an RTI, but the RBI’s releases show that it has received only 7,260 million. The difference according to this is 1,550 million notes.

The report also states that another RTI showed that the press at Nashik had issued 210 million pieces of ₹500 notes in FY16, whereas the RBI records do not show such receipt.

The author has added 1,550 and 210 arriving at 1,760 missing ₹500 notes, which are valued at ₹88,000 crore.

What was the RBI’s rejoinder?

The RBI in its rejoinder has said that the media reports regarding the missing notes are incorrect and are based on an erroneous interpretation of the information collected through an RTI filing. RBI says it has properly accounted for all the notes supplied by the various printing presses to the central bank.

The RBI note further says, “there are robust systems in place for reconciliation of banknotes printed at the presses and supplied to RBI which include protocols to monitor production, storage and distribution of banknotes. Members of the public are, therefore, requested to rely on the information published by RBI from time to time in such matters”.

What could be the explanation behind the missing ₹500 notes?

Contrary to the ongoing speculations that the notes were waylaid on the route from the Press to the RBI’s premises or quietly ferreted away by political bosses, the explanation could be simply lapses in reconciliation and accounting.

For starters, notes issued from the press can not be construed as money. Senior banking officials explain that the issue from the Press simply means that the notes have been produced. They have to pass through currency chest and then to bank ATMs and bank branches when they enter circulation.

So there could be some notes in transit which are not added to the currency in circulations. Then, some could have been printed in one financial year but supplied in another financial year. In other words, it is difficult to do the math. But they argue that there is no real shortfall or missing notes.

Is there any possibility of any underhand activity here?

Former RBI officials argue that the notes requested by the RBI and agreed to be supplied by the printing press should get reconciled and there cannot be any ambiguity. The supplies made by the press cannot be missed enroute. The likelihood of any underhand activity however is unlikely.

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