The Reserve Bank Of India, which suspended printing of the pink notes of Rs 2,000 notes in the past two years, seems to be taking this decision deliberately.
Rs 57,757 crore worth Rs 2,000 notes have been taken out of circulation in FY2021, as per the latest annual report released by RBI on Thursday.
In FY20, a total number of notes worth Rs 5,47,952 crore were in circulation but in FY2020, so far, it fell to Rs 4,90,195 crore in FY21.
The highest-denomination notes worth Rs 57,757 crore were taken out of the circulation in the past year, though the reason behind it is unclear.
“The year witnessed a higher than average increase in banknotes in circulation primarily due to precautionary holding of cash by the public induced by the Covid-19 pandemic, and its prolonged continuance,” said the report, which was released on Thursday.
“Concerted efforts were made to ensure that Currency Chests remain adequately stocked with all denominations of banknotes to maintain the timely supply of fresh banknotes across the country,” it further said.
Currency in circulation has been witnessing a rise alongside the boom in digital transactions. The volume of banknotes in circulation has increased, standing at 12,436.7 crore pieces as of March 31, 2021, against 11,597.7 crore pieces in 2019-20.
The report highlighted the “aim to focus on procurement of new shredding and briquetting systems, augmentation of disposal of soiled notes; and establishment of a state-of-the-art facility for conducting cutting edge research to test the robustness of security features of currency notes and introduction of new security features.”
“Going ahead, the Reserve Bank would endeavour to enhance the lifespan of banknotes, automate the handling and processing of notes, and rationalise the available infrastructure for maximum utilisation,” it said.
The Rs 2,000 note was created to ease the shortage of money supply following demonetisation. Now, that supply has reached a level where the central bank is uncomfortable with, as high-value notes are easier to turn from black to white.