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After note ban, launch of Rs 200 note will fill missing middle: SBI report

Going by historical trends, cash in hand with banks is roughly 3.8% of CIC and is currently at 5.4%

Press Trust of India  |  New Delhi 

Photo: Shutterstock
Photo: Shutterstock

Introduction of Rs 200 note will fill in the "missing middle" even as the new (CIC) has already reached 84 per cent of the pre level, says a report.

with banks, a CIC component, has however witnessed a decline over November 2016 level, said the State Bank of India Ecowrap report.


The data for June 23, 2017 shows in hand with banks declining to 5.4 per cent of the from a high of 23.19 per cent for the fortnight ended November 25 2016, it said.

Going by historical trends, in hand with banks is roughly 3.8 per cent of CIC and is currently at 5.4 per cent.

This means at least an additional amount of 1.6 per cent/ Rs 25,crore of excess currency may be currently lying in ATMs and herein lies the importance of new which could serve as the "missing middle" it said.

The report added that Reserve Bank of India has recently "put orders" for it.

"The in hand with banks has been higher compared to the last year, because of and the subsequent limits placed on withdrawals for some time. However, now the percentage is showing a decline and reaching pre- levels," it added.

The report noted that though there has been a significant move towards relocating distribution of currency towards smaller denominations post demonetisation, there is a mismatch caused by the presence of Rs 2,denomination straight after Rs 500 denomination.

Moreover, an ATM machine typically holds 10,bills and if these were to comprise say only notes of Rs 100, the number and cost of replenishment goes up significantly.

"Herein lies the paradox. Notes of Rs 2,denomination in ATMs may find few takers because of missing middle/Rs 200 note," the report said.

The Reserve Bank is reportedly expected to introduce in the coming months to ease pressure on lower- denomination currencies that are in short supply.

The new notes of Rs 200 should be out before the end of 2017 and will greatly help in narrowing the demand and supply gap in smaller-denomination currency bills.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)