Nearly three years after demonetisation, currency in circulation continues to grow sharply. This is true for both banknotes as well as coins in circulation, although the number of ₹2,000 notes has reduced in the last one year.

Notes in circulation

According to data in the RBI’s annual report, the number of banknotes in circulation at the end of March jumped to 10,875.9 crore pieces. In 2017-18 and 2016-17, it was largely unchanged at 10,239.5 crore pieces and 10,029.3 crore pieces, respectively. In value terms, banknotes in circulation shot up to ₹21.1-lakh crore in 2018-19, from ₹18.03-lakh crore in 2017-18.

“The value and volume of banknotes in circulation increased by 17 per cent and 6.2 per cent, respectively, during 2018-19,” said the report, which was released on Thursday. The number of ₹2,000 notes, however, fell to 329.1 crore pieces in 2018-19, constituting just 3 per cent of the notes in circulation, from 336.3 crore pieces a year ago. In value terms, the decline was sharper at ₹6.58-lakh crore, or 31.2 per cent of the notes in circulation in 2018-19, from ₹6.72-lakh crore, or 37.3 per cent of the notes in circulation in 2017-18.

₹ 500 banknotes

However, there was a sharp increase in the value of ₹500 banknotes in circulation — from 42.9 per cent to 51 per cent over the year.

“In value terms, the share of ₹500 and ₹2,000 banknotes, which had together accounted for 80.2 per cent of the total value of banknotes in circulation at March-end 2018, increased to 82.2 per cent at March-end 2019,” the report said.

The RBI said that the indent or note printing order for 2018-19 was lower by 5.6 per cent from the level a year ago. However, the supply of banknotes during 2018-19 was higher than the previous year.

The supply of coins also increased during the period by 4.8 per cent over the previous year.

The RBI report also said that it would soon launch a field trial of varnished notes. “The RBI will introduce varnished banknotes of ₹100 denomination on field trial basis to increase the life of banknotes,” it said.

The central bank had made a similar announcement in its annual report last year as well, stating that varnished notes would lead to a longer shelf life.

“International experience suggests that varnishing of banknotes is expected to increase their life and durability, reduce banknote replacement requirements and, thereby, lower the overall security printing expenditure,” the RBI said in its annual report 2017-18, adding that it would conduct a field trial.

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