Mumbai: The Reserve Bank of India on Thursday said banknotes in circulation witnessed higher than average increase during 2020-21, on account of precautionary holding of cash by people due to the COVID-19 pandemic, and its prolonged continuance.
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, said the RBI annual report.
In value terms, 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.
"The year (2020-21) 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," the RBI' its Annual Report for 2020-21 said.
The Reserve Bank of India (RBI) said when the precautionary demand for cash surged in the economy with the onset of the COVID-19 pandemic, it endeavoured to meet the increased demand for banknotes.
"In value terms, 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," the report said.
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 report said the indent of banknotes was lower by 9.7 per cent in 2020-21 than that of a year ago. The supply of banknotes was also marginally lower by 0.3 per cent during 2020-21 than in the previous year.
As per the report, the total expenditure incurred on security printing during July 1, 2020 to March 31, 2021 was Rs 4,012.1 crore, as against Rs 4,377.8 crore in the previous year (July 2019 to June 2020).
On counterfeit banknotes, it said that during 2020-21, out of the total Fake Indian Currency Notes (FICNs) detected in the banking sector, 3.9 per cent were detected at the Reserve Bank and 96.1 per cent by other banks.
A total of 2,08,625 pieces of counterfeit notes were detected during 2020-21, as compared to 2,96,695 pieces during 2019-20, and 3,17,384 during 2018-19.