26 Aug 2020: Not even one Rs. 2,000 note printed in 2019-20
Four years after they were introduced, the circulation and printing of Rs. 2,000 notes have declined sharply with not even a single one being printed by Reserve Bank of India's (RBI) currency note presses in the 2019-20 fiscal year, the annual report of the top bank said this week.
In sharp contrast, a larger number of Rs. 500 notes are in circulation.
Introduction: In 2016, PM Modi scrapped older notes, introduced newer ones
On November 8, 2016, Prime Minister Narendra Modi announced that the existing Rs. 1,000 and Rs. 500 notes won't remain in circulation and newer Rs. 500 notes and Rs. 2,000 notes will be introduced.
He dubbed demonetization as "one positive step in the fight against black money and corruption."
However, the surprise move didn't earn lauds from the opposition and few economists.
Figures: Since demonetization, RBI has been printing fewer Rs. 2,000 notes
Over the years, the number of Rs. 2,000 notes in circulation have dipped consistently. From 3.36 billion pieces present in 2017-18, 2.73 billion were in circulation in 2019-20.
Obviously, RBI also printed fewer Rs. 2,000 notes.
In 2016-17, 3.5 billion pieces were printed, 151 million in 2017-18, 47 million in the next fiscal year, and not even one in 2019-20.
Details: Less printing, more dumping: How RBI treated Rs. 2,000 notes
Moreover, RBI has been disposing of a higher number of Rs. 2,000 notes.
After not rejecting any notes in 2016-17 and 2017-18, RBI disposed of one million Rs. 2,000 notes in 2018-19 and 176.8 million of soiled notes in 2019-20. In the last fiscal year, 6.5% of the total Rs. 2,000 notes in circulation were disposed of.
In contrast, only 0.6% of Rs. 500 notes met such fate.
Rs. 500: Rs. 2,000 notes suffered but Rs. 500 notes gained
While Rs. 2,000 notes didn't get printed, Rs. 500 notes did. According to HT, Rs. 500 denomination made up for more than half of the 22 billion currency notes printed in the last fiscal year.
In 2019, 215,176 lakh pieces of Rs. 500 notes were in circulation. The number spiked to 294,475 lakh pieces, a report in IE claimed.
Reason: RBI said BRBNMPL and SPMCIL didn't make fresh supplies
Interestingly, RBI had a simple explanation for not printing Rs. 2,000 notes.
The bank said no indent for printing notes was made as Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) and Security Printing and Minting Corporation of India Limited (SPMCIL) made no fresh supplies.
"The indent of banknotes for 2019-20 was lower by 13.1% than that of a year ago," RBI said.
Statement: Apparently, there is no urgency to print Rs. 2,000 notes
On the new development, a government official said Rs. 2,000 notes were introduced in 2016 to quickly fill the gap created by defunct Rs. 500 and Rs. 1,000 notes.
Now, with smaller denomination notes being used by banks and digital transactions becoming increasingly common, there is no urgency to print these notes.
But this doesn't mean Rs. 2,000 notes will be discontinued, reports HT.
Details: Calibration of ATMs with lower currency notes is easier: Banker
Another banker told Deccan Chronicle, "There may be some people hoarding Rs. 2,000 currency notes. Banks are not reissuing Rs. 2,000 notes and maybe banks have been told by RBI not to reissue Rs. 2,000 notes."
The person also stressed that calibrating ATMs with lower currency notes is easier and that Rs. 500 notes are "easily convertible."