Demonetisation hit RBI's seigniorage, increased printing cost: SBI Research

Demonetisation has caused a net loss to the Reserve Bank of India's (RBI's) seigniorage -- the profit accruing from currency issuances and liquidity operations -- besides increasing the cost of printing notes, says an SBI Research report.

On November 8 last year, the government had banned old Rs 500 and Rs 1,000 notes in an attempt to weed out black money in the country. The old notes were allowed to be deposited in banks, with unusual deposits coming under income tax scrutiny.

"The demonetisation exercise has resulted in net loss of seigniorage to the RBI," SBI's research report Ecowrap said.

"In the current case, there is a seigniorage loss, as the face value of Rs 15.28 lakh crore (15.28 trillion) of Rs 17.10 lakh crore (17.1 trillion) has been printed," it said.

The report further said that "the cost of printing notes and coins has increased during this year".

In its Annual Report for 2016-17, RBI has said that post demonetisation, it has spent Rs 7,965 crore on printing new Rs 500 and Rs 2,000 and other denomination notes, more than double the Rs 3,421 crore spent in the previous year.