India's re-monetisation exercise appears to be entering its final lap, with the central bank beginning to print bills of 200 rupees – perhaps for the first time – to help ease consumer transactions.
The notes of Rs 200 denomination are being printed in one of the government-owned facilities after the Reserve Bank of India (RBI) placed an order a few weeks ago for the bills, two people familiar with the matter told ET.
An email sent to the RBI seeking its comments could not elicit any response until the publication of this report.
"For day-to-day transaction purposes, the introduction 200 rupee notes will add to the ease of operations," said Soumya Kanti Ghosh, group chief economist at the SBI Group.
The introduction of the Rs-200 currency notes predates the federal government’s decision to overnight withdraw bills of higher denomination in November as part of a broader exercise to stop counterfeiting and curbing untaxed cash in Asia’s third-biggest economy.
The RBI board had earlier cleared the proposal to issue banknotes of Rs 200 denomination. The government, too, had examined the introduction of the new notes that would help citizens transact easily.
Before the November 8 de-monetisation, there were roughly 1,650 crore pieces of Rs 500 notes in circulation, according to data from the State Bank of India research. With the removal of this series from the system, there was a large gap in the value of notes in circulation.
Filling the Void
"A minor part of that has been replenished by 2000 rupee notes and a larger part by the new 500 rupee notes, though not in full,” said Ghosh. “The introduction of 200 rupee notes will replenish the missing middle, triggered by the withdrawal of the old series of 500 rupee notes."
Lower denomination notes aids the government’s efforts at realigning the currency mix in the system.
During demonetisation, it had ordered the withdrawal of the then existing Rs 500 and Rs 1,000 currency notes, which accounted for about 86% of currency in circulation of Rs 17.9 lakh crore.
As on June 9 this year, the currency circulation with the public is at Rs 14.6 lakh crore, still 18.4% lower than the pre-demonetisation level.
"The new 200 notes will carry advanced security features. The authorities are taking extra precaution to prevent counterfeiting," said a source aware of the printing schedule.
Currently, those notes are going through different levels of security and quality checks at the government's press unit at Hoshangabad (Madhya Pradesh), the person said.
The printing of currency notes is done either in printing units run by the government-run Security Printing and Minting Corporation of India Ltd or at printing presses in Mysore (Karnataka) and Salboni (West Bengal), managed by the RBI-owned Bharatiya Reserve Bank Note Mudran Private Ltd.
Source:-The Economic Times