Wednesday, August 30, 2017

Government has no plans yet to reissue Rs 1,000 currency notes

Rumours of government bringing back Rs 1,000 currency notes were put to rest with Ministry of Finance denying any such plans.

"There is no proposal to reintroduce 1,000 rupee note" said Economic Affairs Secretary Subhash Chandra Garg in a tweet.

Reports of Rs 1,000 currency bills being reintroduced started doing the rounds shortly after the Reserve Bank of India issued new 200 rupee notes for the first time ever on August 25. Rs 1,000 currency notes were scrapped in demonetisation of high denomination notes back in November last year. Modi government had announced the withdrawal of old Rs 500 and Rs 1,000 currency notes to put a check on black money, influx of counterfeit notes and terror financing.

The RBI had issued Rs 2,000 notes along with new Rs 500 bills, with additional security features.

The central bank also launched Rs 200 notes to ease pressure on lower-denomination currency bills and also fill the "missing link" between Rs 100 and Rs 500 currency. Besides the bright yellow 200 rupee notes, Rs 50 currency bills in fluorescent blue with revised designs and security features was also introduced earlier this month. Both new notes were issued with new Mahatma Gandhi series and signature of RBI Governor Urjit Patel.

The RBI has already announced that it would be ramping up the supply of Rs 200 notes.

The optimal system of denominations of currency (coins and notes), the RBI had said, is one that would minimise the number of denominations and concurrently increase the probability of proffering exact change.

"So, what should be the optimal mix of currency denominations? Many countries have opted to use a near variation of the Renard Series, i.e., 1:2 or 1:2.5 ratio between adjacent denominations of currency, which means that the denomination should be twice or two and half times of its preceding denomination," the central bank had said.

Such a ratio allows exchange of value ordinarily in a maximum of three denominations, it added.

Amidst new and revised notes being issued, Finance Minister Arun Jaitley had clarified last week that Rs 2000 notes in circulation will continue to be legal tender. The RBI, however, has reportedly stopped printing new Rs 2000 notes.

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