On the night of November 8, 2016, Prime Minister Narendra Modi demonetized all 500 and 1000 rupee notes. The Reserve Bank of India (RBI) reported in 2018 that 99.3 percent of the old notes have been handed to the banking system.
Today, more than 5 years after that historic announcement, when tens of thousands of people queued outside banks to exchange their old notes for new ones, one issue remains unanswered: what occurred to those old notes?
What did the Reserve Bank of India (RBI) and the government do with the old banknotes? What did they do with them? Did they reuse them or other?
What Happened to the Notes That Were Demonetized?
The demonetized currency gathered from banks is processed through a monetary authentication and processing system that can distinguish between real and phoney notes, according to prior assertions by RBI officials.
After that, the demonetized currencies are shredded and turned into coals, which are compressed garbage blocks. Tenders are invited after it has been converted into briquettes. The briquettes are subsequently supplied to wood and paper producers.
In summary, the RBI receives old outlawed notes, which are shredded and turned into composite waste blocks, which are then sold to cardboard and paper manufacturers through tenders.
According to the Reserve Bank of India, there were 1,716.5 crore pieces of 500 and 685.8 crore pieces of 1,000 currency in circulation on November 8, 2016, the day of the display of information, totaling a huge amount of 15.44 lakh crore.
The Reserve Bank of India claimed in its annual report for 2016-17, released on August 30th 2017, that 15.28 lakh crore, or nearly 99.3% of the demonetized notes, had returned to the banking system.
Only 16,050 crore of the 15.44 lakh crore kept in previous demonetized notes was not recovered for the financial year ended June 30, 2017, according to the RBI.
However, even after more than five years since this massive demonetization move, the question of whether demonetization was successful in capturing black money remains unresolved.