Demonetised Rs 500 and Rs 1,000 notes, which have been counted and processed for genuineness, are shredded and briquetted before being disposed of through a tendering process, RBI said.
The central bank had earlier estimated the value of old Rs 500 and Rs 1,000 notes received, as on 30 June 2017, at Rs 15.28 trillion.
Old currency notes which include demonetised Rs 500 and Rs 1,000 notes are counted and processed in sophisticated currency verification and processing system.
The process of shredding and briquetting will be done in the systems installed in various RBI offices.
Once compressed into bricks', the shredded notes are disposed of through a tendering process, according to the reply, which is not recycled by the RBI.
At least 59 sophisticated Currency Verification and Processing (CVPS) machines are in operation in various branches of RBI across the country to process demonetised notes for their arithmetical accuracy and genuineness.
The government had on 8 November 2016 banned the use of Rs 500 and Rs 1,000 notes and allowed the holders of these currency bills to deposit them with banks or use them at certain notified utilities.
In its annual report for 2016-17 released on 30 August last year, the RBI said Rs 15.28 lakh crore, or 99 percent of the demonetised notes, had returned to the banking system.
In the report, the RBI said that by 30 June 2017, only Rs 16,050 crore of the Rs 15.44 lakh crore in old high denomination notes had not returned.
As on 8 November 2016, there were 1,716.5 crore pieces of Rs 500 and 685.8 crore pieces of Rs 1,000 notes in circulation, amounting Rs 15.44 lakh crore, it had said.
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