No. of 2,000-rupee notes shrink 7.2 cr in FY-19

MUMBAI: The Rs 2,000 note, which was much-reviled during demonetisation due to difficulties in exchanging it, is seeing a sharp drop in print orders by the RBI. The number of outstanding notes has shrunk by 7.2 crore to 329 crore in FY19.

According to bankers, the RBI is shifting focus away from the Rs 2,000 note as the denomination was printed in large numbers to cope with the replacement of demonetised notes.

No proposal to withdraw Rs 2,000 notes: Government^[3]

The government has said that there is no proposal to withdraw Rs 2,000 denomination note. RBI introduced the Rs 2,000 notes following demonetisation of high value Rs 500 and Rs 1,000 notes in November 2016.

After all demonetised notes were replaced in March 2017, the Rs 2,000 note accounted for half the total value of the currency in circulation. A year later its share declined to 37%. It now accounts for 31% of the value of total currency in circulation.

Currency surge due to small note need; circulation of Rs 2,000 notes inadequate: Study^[4]

According to a report by SBI, the pace of circulating Rs 200 denomination notes, as well as other smaller units, increased manifold in FY18. The SBI report comes close on the heels of a similar study by HSBC, which said that the cash surge is a reflection of increasing ‘informality’ — a euphemism for unaccounted transactions or black money.

All other banknotes saw an increase in the number in circulation. The biggest increase in share was by the Rs 500 note which now accounts for 51% of the Rs 21.1 lakh crore of banknotes in circulation. There are 2,151 crore Rs 500 notes in circulation which is more than the 2,007 crore notes of Rs 100.

Currency in circulation rises 22% in May over pre-demonetisation level^[5]

Currency notes in circulation stood at Rs 21.71 lakh crore at May-end 2019, showing an increase of more than 22% over the pre-demonetisation level. As per a reply given by finance minister Sitharaman in the RS, the notes in circulation as on November 4, 2016 were Rs 17,74,187 crore, which have now increased to Rs 21,71,385 crore as on May 31, 2019.

Notes of Rs 10 denomination are the largest in number with 3,128 crore in circulation. According to the RBI, indent (orders based on demand from banks) of banknotes for 2018-19 was lower by 5.6% from their level a year ago. However, the supply of banknotes during 2018-19 was higher than in the previous year.
In volume terms, Rs 10 and Rs 100 banknotes constituted 47.2% of total banknotes in circulation at the end of March 2019 as against 51.6% at the end of March 2018. Coins of Re 1, Rs 2 and Rs 5 together constituted 83.6% of the total volume of coins in circulation, while in value terms, these denominations accounted for 78.3%.
The central bank spent Rs 4,811 crore in printing currency notes in 2018-19 compared to Rs 4,912 crore in 2017-18. This is the single biggest expenditure of the RBI after employee costs.
^[1][2]

References

1. ^{^} demonetisation (timesofindia.indiatimes.com)
2. ^{^} RBI (timesofindia.indiatimes.com)
3. ^{^} No proposal to withdraw Rs 2,000 notes: Government (timesofindia.indiatimes.com)
4. ^{^} Currency surge due to small note need; circulation of Rs 2,000 notes inadequate: Study (timesofindia.indiatimes.com)
5. ^{^} Currency in circulation rises 22% in May over pre-demonetisation level (timesofindia.indiatimes.com)

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