Raghuram Rajan: Demonetisation put new interest burden on RBI as people found ways to convert black money

The failure to stop dodgy cash coming back into the banking system after demonetisation has likely burdened the Reserve Bank of India with additional interest payments running into tens of thousands of crores, former governor of the central bank Raghuram Rajan said Thursday. Latest Reserve Bank of India data shows that all but 1% of the high-value bank notes demonetised on November 8 last year have returned to the banking system, meaning black money hoarders found ways to legitimise their cash that now earns interest. Rajan estimates this burden could be as…

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