The Centre is examining a proposal from the Reserve Bank of India (RBI) to introduce ₹200 denomination currency notes to improve the cash situation, top central banking sources told The Hindu .
According to the sources, a smaller denomination note will improve liquidity. In November last year, the Centre announced the demonetisation of ₹1,000 and ₹500 notes. While a new ₹500 note was introduced with added security features, a new ₹1,000 note was not reintroduced. Instead, a new ₹2,000 denomination currency note was introduced.
Smaller denomination
“We felt there is a need now for smaller denomination notes,” said the source.
“There are no denominations between ₹100 and ₹500. So, we have proposed introduction of ₹200 by the government,” the source said. “In case a decision is taken to introduce the new note, it will take 6 to 8 months for the new currency to be in circulation,” the source added.
There are two bank note printing presses in the country — Bharatiya Reserve Bank Note Mudran Private Limited — a subsidiary of the RBI, and the government-owned Security Printing and Minting Corporation of India Limited.
According to RBI, smaller denomination notes constituted only 13.6% of the total currency in circulation, in value terms, as at March 2016.
The higher denomination notes — ₹500 and ₹1,000 — that were demonetised constituted 86.4% of the currency in circulation.
At end-March 2016, the value of banknotes in circulation was ₹16.415 lakh crore — a rise of 14.9% over the previous year. According to RBI, the volume of banknotes increased by 8% against 8.1% in 2014- 15.
