More than seven months after the ₹500 and ₹1000 currency notes were scrapped in a demonetisation exercise aimed at cracking down on black and counterfeit money, the Reserve Bank of India has started printing ₹200 bills in order to plug the persisting cash crunch.
The Economic Timesreported today that the RBI had placed an order for ₹200 notes, a few weeks earlier, and the notes are being printed at a government-owned facility. The central bank expects the new currency note to make easier consumer transactions. The bills will reportedly carry advanced security features to prevent counterfeiting.
The ₹200 currency note would be the third new bill to be printed following demonetisation. The ₹500 note was replaced by a new bill of the same denomination, last year. And the ₹1000 note was replaced with a ₹2000 bill. With the scrapping of the old notes, an estimated 86% of the cash in the country or ₹17.9 trillion was put out of circulation. In April, Livemintreported that as on 24 March, currency in circulation was ₹13.12 trillion, still around 27% off pre-demonetization levels.
The RBI board in March had cleared a proposal to introduce the ₹200 notes to make up for the shortfall in lower denomination notes.
The ET, however, reported that the Centre was planning to introduce the ₹200 notes even before it executed its demonetisation exercise. As thing stands today, the new bills will help fill the void that exists after an estimated 1,650 crore pieces of ₹500 notes were taken out of circulation.
Soumya Kanti Ghosh, group chief economist at the SBI Group, told the newspaper, "The introduction of 200 rupee notes will replenish the missing middle, triggered by the withdrawal of the old series of 500 rupee notes."
Earlier this year, the Hindustan Timesreported that RBI did not want to circulate the ₹200 notes through ATMS in order to avoid the headache of recalibrating the machines. Instead, the central bank planned to circulate the notes through bank branches.
At the time, the newspaper quoted a RBI official who said, "The idea is not to disturb the system once again, there has been disruption for more than four weeks between November and December and it is advisable to circulate these notes through the bank branches, though at present these are just proposals."
Meanwhile, there has also been speculation over whether the Modi government plans to eventually scrap the ₹2000 note. Given that the Centre scrapped the ₹1000 note to prevent huge amounts of cash to stashed away, introducing an even larger denomination bill had defied logic. Some believe that scrapping the bill in the next few years could act as a deterrent against hoarding.
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