RBI raises red flag over Rs 1 trillion currency demand in Karnataka

MANGALURU: The Reserve Bank of India has raised a red flag regarding unprecedented demand for currency in Karnataka, to the tune of Rs 1 trillion, in the last quarter of this year from January to March.
The RBI in a letter to Lead Development Officer, Mangaluru, has sought details of transactions made by banks in Dakshina Kannada – since the district is bordering Kerala, where polls will be held on May 16.
In the letter by RBI, it states: We have observed sudden large increase in currency demand in the economy. More than Rs 1 trillion increase in currency demand in the last quarter of 2015-16 is unprecedented – in terms of increase in any quarter. We would like to know whether this demand is due to state elections in the neighbouring state and whether the money is withdrawn from Karnataka for that. Please discuss the matter with the currency chest banks in your area and reply to us at the earliest.
The letter was brought to the notice of the banks during the bank security meeting held by Superintendent of police SD Sharanappa here on Monday.
While one of the currency chest bank representative said that they had not seen unprecedented or alarmingly high transactions, but there was a demand from Bengaluru branches for Rs 1,000 and Rs 500 notes. "About Rs 700 crore was sent in those denominations recently," he added.
Raghav Yajamane, lead bank manager, Syndicate Bank, said the red flag may have been raised since the money so withdrawn has not gone back into the banks.