The Reserve Bank of India (RBI) said the central bank moved to increased demand of cash with the onset of the pandemic last year.
RBI said the value and volume of banknotes in circulation increased by 16.8 per cent and 7.2 per cent, respectively, during 2020-21 as against an increase of 14.7 per cent and 6.6 per cent, respectively, witnessed during 2019-20.
According to data released by the central ban, circulation of Rs 2000 denomination banknote consistently decreased both in volume and value from 2019 levels. In 2019, there were 329.10 crore Rs 2,000 banknotes in circulation representing 3% of the total volume of currency in circulation at the time which came down to 245.10 crore or 2% of the total volume. In terms of value, Rs 2,000 banknotes formed Rs 6.58 lakh crore or 31.2% of the total value of banknotes in circulation in 2019 which came down to Rs 28.27 lakh crore or 17.3% of the total value of banknotes in 2021.
The central bank disposes of soiled banknotes every year which was affected due to the COVID-19 pandemic and was expedited during the latter part of the year 2020-21.
The share of Rs 500 and Rs 2,000 banknotes together accounted for 85.7 per cent of the total value of banknotes in circulation as on March 31, 2021, as against 83.4 per cent as on March 31, 2020, RBI noted.
In volume terms, Rs 500 denomination constituted the highest share at 31.1 per cent followed by Rs 10 denomination banknotes which constituted 23.6 per cent of the total banknotes in circulation as on March 31, 2021, the central bank said in its annual report 2020-21, it further added.
Whereas the share of Rs 500 denomination banknotes in the total volume of banknotes showed an increasing trend from 19.8 per cent as on March 31, 2019 to 25.4 per cent as on March 31, 2020 and to 31.1 per cent as on March 31, 2021, the share of Rs 10 denomination banknotes in the total volume showed a declining trend from 28.7 per cent as on March 31, 2019 to 26.2 per cent as on March 31, 2020 and to 23.6 per cent as on March, 31, 2021, the central bank said.
