RBI Highlights Surge in Rs 500 Notes Post Rs 2,000 Withdrawal

The Reserve Bank of India, in its annual report for the financial year ending March 2024 released on Wednesday, highlighted a significant surge in the circulation of Rs 500 notes following the withdrawal of Rs 2,000 notes from the market.

Banknotes in circulation rose 7.8% year-on-year to 14,687.5 crore notes in the financial year 2024, according to Reserve Bank of India.

Among the notes in circulation, Rs 500 notes were the highest in volume, increasing 16.5% year-on-year to 6,017.7 crore notes as of fiscal 2024. In absolute terms, the volume of Rs 500 notes in circulation increased by 85,432 lakh in FY24 as in the previous fiscal, 5,163.3 crore notes were in circulation.

This was followed by Rs 10 banknotes, according to the RBI annual report.

In terms of value, too, the share of Rs 500 notes in circulation increased and stood highest at 86.5%, out of the total Rs 34.77 lakh crore worth of banknotes in circulation.

This occurred as the chunk of Rs 2,000 notes in circulation declined sharply, indicating a withdrawal of the denomination. In absolute terms, their share fell to 0.2% of the total value of banknotes in circulation, to Rs 8,202 crore.

"The withdrawal of Rs 2,000 banknotes during the year and their return as bank deposits led to a deceleration in currency in circulation as well as reserve money while simultaneously contributing to an acceleration in deposit growth," the central bank said in its annual report.

The central bank, in May 2023 announced the withdrawal of banknotes of Rs 2,000 denomination. At that time, there were Rs 3.56 lakh crore worth of these notes in circulation, and the central bank gave the option to either exchange them for other denominations or deposit them in bank accounts. Till March 2024, 97.7% had returned to the banking system, the RBI said.

While a majority of denominations saw a dip in their overall volume in circulation between April 2022 and March 2024, Rs 100, Rs 200, and Rs 500 banknotes saw a rise. The volume of Rs 100 notes in circulation increased from 1,805.84 crore in the fiscal 2022-23 to 2,056.5 crore in the succeeding fiscal, according to RBI's annual report.

Whereas, the volume of Rs 200 notes rose 23.1% year-on-year to 771.08 crore in 2022-23.