According to the Reserve Bank of India's report on demonetisation, what percentage of the demonetised Rs 500 and Rs 1,000 banknotes returned to the banking system?

Introduction / Context:
On 8 November 2016, the Government of India demonetised the existing Rs 500 and Rs 1,000 banknotes. One of the most discussed aspects of this exercise was how much of the demonetised currency eventually returned to the banking system. The Reserve Bank of India, in its annual report, disclosed the percentage of notes that were deposited back.

Given Data / Assumptions:

• The question is about demonetised Rs 500 and Rs 1,000 notes.
• We are asked for the percentage of such notes that returned to the banks.
• The options are 79.30 percent, 93.30 percent, 88.30 percent and 99.30 percent.
• We assume the figure is taken from RBI's official annual report on demonetisation.

Concept / Approach:
When demonetisation was announced, expectations varied regarding how much of the old currency would be returned. Some anticipated that a significant portion would stay outside the system and become cancelled value, thereby generating a windfall for the central bank. However, RBI's data showed that almost all demonetised notes came back. The widely quoted figure was 99.30 percent of the value of Rs 500 and Rs 1,000 banknotes returned to the banking system.

Step-by-Step Solution:
Step 1: Recall that RBI's report indicated that a very high proportion of demonetised currency returned to banks.Step 2: The precise proportion was reported as 99.30 percent of the total value of demonetised notes.Step 3: Compare this figure with the answer choices 79.30 percent, 93.30 percent, 88.30 percent and 99.30 percent.Step 4: Identify 99.30 percent as the correct value.Step 5: Select 99.30 percent as the final answer.

Verification / Alternative check:
RBI's annual report on the outcome of demonetisation explicitly states that 99.30 percent of the demonetised Rs 500 and Rs 1,000 notes, by value, were returned. This result was widely reported in national and international media, highlighting that only a very small fraction did not come back to the formal banking system.

Why Other Options Are Wrong:

• 79.30%: This would imply that over 20 percent of the notes did not return, which contradicts official data.
• 93.30%: While high, it still understates the actual return rate as per RBI reports.
• 88.30%: This is another distractor value far below the figure of 99.30 percent.

Common Pitfalls:
Some candidates generalise from early speculative estimates rather than relying on the final numbers published by the RBI. Others may mix up the exact decimal value, remembering only that “almost all” notes returned. To avoid confusion, it is helpful to remember the exact figure as 99.30 percent, which underlines how small the amount of unreturned currency actually was.

Final Answer:
According to RBI data, 99.30% of the demonetised Rs 500 and Rs 1,000 banknotes returned to the banking system.