Value, volume of banknotes in circulation up 4%, 8% respectively

Rs500 note in value terms of the total currency in circulation surged to 86.5% as of March 31

Mumbai: Reserve Bank of India’s (RBI) annual report for 2023-24 says that the value and volume of banknotes in circulation increased by 3.9 per cent and 7.8 per cent, respectively, during 2023-24 compared with an increase of 7.8 per cent and 4.4 per cent, respectively, during the previous year.

 The share of the Rs500 note in value terms of the total currency in circulation surged to 86.5 per cent as of March 31, 2024, gaining from 60.8 per cent in March 2020, and from 77.1 per cent in March 2023.

The increase in the share of the Rs500 note coincides with the declining share of the Rs2000 note, which was only 0.2 per cent at the end of FY23.

“During 2023-24, the share of Rs500 banknotes increased in value terms whereas that of Rs2000 banknotes declined sharply, reflecting the withdrawal of the latter denomination from circulation,” RBI said in the report.

The Reserve Bank of India has been in the process of withdrawing the Rs2000 denomination banknotes since last year. The Rs2000 note, however, is still legal tender.

“About 89 per cent of the Rs 2000 denomination banknotes were at the end of their estimated lifespan of 4-5 years and were not commonly used for transactions,” RBI said while elaborating on the reason for withdrawal.

The report says 97.7 per cent of the Rs2000 notes have returned to the banking system.

The value of total currency in circulation as of March 31, 2024, was Rs38.78 trillion, up by around Rs10 trillion in the last five years, from Rs24.21 trillion in March 2020.