Indians Using Fewer Rs 2,000 Notes, RBI Mulls New Varnished Rs 100 Notes: Annual Report

New Delhi: In its annual report released on Thursday, the Reserve Bank of India (RBI) mentioned the introduction of varnished currency notes of Rs 100 denomination on a field trial basis.

In its 2017-18 annual report, the RBI had stated that it was exploring the feasibility of increasing the life of Indian banknotes.

“International experience suggests that varnishing of banknotes is expected to increase their life and durability, reduce the banknote replacement requirements and thereby lower the overall security printing expenditure," the RBI said.

Additionally, for the first time since its release in November 2016, Rs 2,000 notes have shrunk both in value and volume in the financial year 2018-19.

The report stated that the highest-denomination notes worth Rs 14,400 crore were pulled out of the system in the past year, though it's unclear whether it was due to counterfeits or any other reason.

Similarly, the volume of Rs 2,000 notes too fell from 3,363 million pieces in FY18 to 3,291 million pieces in FY19, a fall of approximately 2 per cent.

In contrast, value and volume of Rs 500 notes shot up 39 per cent each in FY19 over FY18, while its share in the total currency mix increased from 43 per cent to 51 per cent.

Predictably, Rs 2,000 notes, which accounted for 50 per cent share of the total currency in FY17 fell to 37 per cent in FY18 and further down to 31 per cent in FY19.

The RBI said that it incurred an expenditure of Rs 4,811 crore on security printing during July 1, 2018 to June 30, 2019 as compared to Rs 4,912 crore in the previous year.

In volume terms, Rs 10 and Rs 100 banknotes constituted 47.2 per cent of total banknotes in circulation at end-March 2019 as against 51.6 per cent at end-March 2018.

The RBI also said that the value and volume of banknotes in circulation increased by 17 per cent and 6.2 per cent to Rs 21.1 lakh crore and 10,875.9 crore pieces, respectively, during 2018-19. In value terms, the share of Rs 500 and Rs 2000 currency notes, which had together accounted for 80.2 per cent of the total value of banknotes in circulation at end-March 2018, increased to 82.2 per cent at end-March 2019.

The RBI in its 2018-19 annual report also said that it will develop a mechanism/device for aiding the visually impaired in identification of denomination of banknotes.