at present there is no such reserve where this can be credited nor is there a policy on how to account for extinguishment of this liability what effect this will have on reducing the fiscal deficit of the government is an issue on which i cannot comment as this is not an accounting matter this is a matter to be decided by the rbi and government of india he said till november 8 the value of rs 500 and rs 1000 notes in circulation was more than rs 15 lakh crore of which roughly 20 about rs 3 lakh crore is estimated to be black money the question is if a chunk of it does not come back to banks or rbi by march 31 or june 30 when rbi closes its accounts will new delhi give up its claims on these notes which it may view have been identified and isolated by the governments direct action against black money according to the chief economist of a private bank rbi may book such unaccounted liability as demonetisation reserves for a few years and conduct asset sales as and when required to accrue to the government as profit transfer but there may be legal hurdles when a currency ceases to be a legal tender all it means is that the physical note stops being in circulation for public usage issued notes are still valid ie promise of the rbi guaranteed by the central government once they stop being legal tender the precedent in india and also other common law countries is that they continue to be exchanged by the specified offices of the central bank in the event the notes are sought to be extinguished in entirety by an administrative action a constitutional challenge would exist said veena sivaramakrishnan partner at the law firm juris corp in any event once the notes are extinguished by an administrative action there is no need for any reserve to be maintained by the rbi and even if so maintained it can as required under law be passed on to the central government she said at present the discussions on the possible influence of demonetisation on the central banks balancesheet are mired in principles of law and accounting but it may cease to be just an academic debate once the dust settles