Keen to fight the cash crunch situation, the government may be pressing the Reserve Bank of India to tame in the scenario but the central banker went on to release data on Wednesday showing that people were still hoarding cash as withdrawals outpaced spending.
It is said that cash withdrawn from banks takes a few months to re-enter circulation as people spend.
It is because of these lags, that the weekly reserve money figures don’t tell exactly how much people have hoarded even as the data does give a strong sense of the trend.
The incremental increase in currency in circulation, a component of the data, shows how much people are withdrawing every week and the amount of new money the RBI is supplying to banks.
It is now known that during the week to 20 April, the people took 163.4 billion rupees ($2.44 billion) out of the banks.
Currency withdrawals in the January-March quarter stood at 1.4 trillion rupees, about 27 percent more than in the same quarter of 2016.
Overall, the currency in circulation stood at 18.9 trillion rupees as of 20 April.
Neither the central bank nor commercial bankers appear to have a clear idea about this sudden pick up in withdrawals.>