He said the next step will be to put an end to black money used in election.
The RBI said on Wednesday that of the Rs 15.44 lakh crore of notes taken out of circulation by the demonetisation of Rs 500 and Rs 1,000 notes last November, Rs 15.28 lakh crore, or nearly 99 per cent, had returned to the system by way of deposits by the public.
Union Finance Minister Arun Jaitley on Wednesday made desperate attempts to defend Prime Minister Narendra Modi, who’s facing considerable embarrassment after it emerged that the 99% demonetised money in circulation was back with the RBI.
Addressing the media, Jaitley said, “Object of demonetisation was not confiscation of money.Integration of the formal and informal economies was among the principal objectives of demonetisation”.
“Those dealing in cash currency have now been forced to deposit these in banks, the money has got identified with a particular owner”, he said.
He also reiterated that the currency ban has affected the “capacity to use cash in terror attacks”. Former finance minister P Chidambaram reacted by hitting out at the government and saying “99% notes legally exchanged!”
“He has no understanding of the objective of demonetization. Was demonetisation a scheme created to convert black money into white?”
The RBI in its annual report for 2016-17 said 1.3 per cent of banned notes were not returned to the banks following the note ban. “For this, it was important to integrate formal and informal economy, reduce the quantum of cash, increase taxpayers, tax base, encourage digitization and give a blow to black money”, said Jaitley.
With the return of the money, the anonymity associated with cash has gone, he said, adding the tax department is scrutinising 18 lakh bank accounts with unusual deposits post note ban.
“People are now compelled to deposit their money into the banks”.
The tax authorities have found undisclosed income of Rs 17,526 crore and Rs 1,003 crore has been seized so far, the finance ministry said in a statement.
For the first time, the RBI has taken a massive effort to purge the system of fake notes.
The effective currency in circulation today is only 83 per cent with full remonetization having taken place, it added.
Suspicious banking transactions increased by a whopping three lakh in 2016-2017, the Reserve Bank of India said in its annual report released on Wednesday.