RBI ramps up circulation of low-value notes in first 9 months of 2017-18

The share of small denomination currency in the total value of the currency was 13% at the time of demonetisation

Nearly half the currency notes circulated by the Reserve Bank of India (RBI) during the first nine months of 2017-18 were of smaller denomination, such as Rs 200, Rs 100 and below, the government informed Parliament on Friday.

“RBI has informed that nearly 48 per cent of the total currency notes supplied since April 01, 2017 till December 31, 2017, are lower denomination notes,” Minister of State for Finance Shiv Pratap Shukla said. He was responding to a query on whether the government has received complaints related to shortage of lower denomination notes in automated teller machines (ATMs). “Denomination-wise requirement of currency notes is being monitored by RBI and accordingly, indent of currency notes is being revised,” the minister added.

He said the RBI has also introduced the Rs 200 note “to ensure balance in the required denomination-mix of currency notes to public.”

The share of small denomination currency in the total value of currency was 13 per cent when the Union government had demonetised high-value currency notes of Rs 500 and Rs 1,000 in November 2016.

“The share of lower denomination notes are going up that will lead to a cleaner economy in terms of transactions.  The share of smaller currency in 2004 was 53 per cent, which declined to 28 per cent in 2009 and to 13 per cent when demonetisation was announced in 2016,” State Bank of India’s chief economist, Soumya Kanti Ghosh, said.

According to RBI’s annual report, high denomination notes of Rs 500 and Rs 2,000 constituted around 73 per cent of all currency in circulation as on March 2017.

SBI’s Ghosh had said in a report last month that the government might have stopped printing Rs 2,000 currency notes. “As a logical corollary, as Rs 2,000 denomination currency led to challenges in transactions, it seems RBI may have either consciously stopped printing the Rs 2,000 denomination notes or printed in smaller numbers after initially printing in ample amount to normalise the liquidity situation,” Ghosh had said in the report. He added the share of smaller value currency notes might have touched 35 per cent of the currency in circulation in value terms as per his own estimates.