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Demonetisation: Have You Wondered What The Govt Will Do With The Old ₹500 and ₹1,000 Notes?

Yes, shredding is involved.

23/11/2016 10:19 AM IST | Updated 23/11/2016 11:05 AM IST
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Bank employees count notes deposited by people after demonetisation.

Two weeks after the demonetisation of ₹500 and ₹1,000 notes, hundreds of people are still lining up in banks to exchange their old notes for new. And, even as new notes are being minted to be put into circulation, the government has a huge task at hand with getting rid of the old notes.

The BBC reports that an estimated 20 billion old notes will have to be shredded and made into briquettes with the use of the 27 shredders the RBI has across India. The report says that in 2015-16, the RBI destroyed more than 16 billion soiled notes.

"Destroying so much cash is not a challenge because we have enough shredding and briquetting machines with very high capacities. These are automatic machines which shred the cash into the finest of pieces," an RBI official told BBC.

The Reserve Bank of India (RBI) website says that under normal circumstances soiled notes and coins that are deposited in banks are first sent to RBI offices. The notes are then segregated by a scanning machine. The currency notes that are absolutely unfit for reissue are shredded.

"Notes fit for circulation are reissued and the others (soiled and mutilated) are destroyed so as to maintain the quality of notes in circulation. The Reserve Bank derives its role in currency management on the basis of the Reserve Bank of India Act, 1934," the website says.

While old notes, the ones that are torn or soiled, are regularly being replaced by new notes, this time around the scale of operations is significantly different.

According to a 2008 report in Mint, the shredding rooms are high security areas and people who are involved in the process wear mask to protect themselves from the dust and fungus. The finely shredded notes are converted into briquettes that are then dumped into landfills. The report says that until the mid-1990s, the RBI used to burn the shredded bits. Thankfully, the new process is more environment friendly.

The BBC report also says that some of the shredded notes are recycled to make files, tea cups, calendars and even trays.


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