BUSINESS

Centre mulling new Rs. 200 note

If okayed, note to arrive in 6-8 months

The Centre is examining a proposal from the Reserve Bank of India (RBI) to introduce Rs. 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 Rs. 1,000 and Rs. 500 notes. While a new Rs. 500 note was introduced with added security features, a new Rs. 1,000 note was not reintroduced. Instead, a new Rs. 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 Rs. 100 and Rs. 500. So, we have proposed introduction of Rs. 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 — Rs. 500 and Rs. 1,000 — that were demonetised constituted 86.4% of the currency in circulation.

At end-March 2016, the value of banknotes in circulation was Rs. 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.

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