The Centre is examining a proposal from the Reserve Bank of India (RBI) to introduce Rs. 200 denomination currency notes to improve the cash situation.
According to the sources, a smaller denomination note will improve liquidity. In November last year, the Centre announced the demonetisation of Rs. 1,000 and Rs. 500 notes.
While a new Rs. 500 note was introduced with added security features, a new Rs. 1,000 note was not reintroduced. Instead, a new Rs. 2,000 denomination currency note was introduced.
There are two bank note printing presses in the country — Bharatiya Reserve Bank Note Mudran Private Limited — a subsidiary of the RBI, and the government-owned Security Printing and Minting Corporation of India Limited.
According to RBI, smaller denomination notes constituted only 13.6% of the total currency in circulation, in value terms, as at March 2016.
The higher denomination notes — Rs. 500 and Rs. 1,000 — that were demonetised constituted 86.4% of the currency in circulation.
At end-March 2016, the value of banknotes in circulation was Rs. 16.415 lakh crore — a rise of 14.9% over the previous year. According to RBI, the volume of banknotes increased by 8% against 8.1% in 2014- 15.