Rs 200 note declared legal tender, RBI to decide on circulation soon
New Delhi: The finance ministry on Wednesday notified the issue of Rs 200 notes, making them legal tender and paving the way for their circulation.
“In exercise of the powers conferred by sub-section (1) of section 24 of the Reserve Bank of India Act, 1934, and on the recommendations of the central board of directors of the Reserve Bank of India (RBI), the central government hereby specifies the denomination of banknotes of the value of two hundred rupees,” the notification stated in the Gazette of India.
On 3 April, Mint first reported RBI’s plan to introduce Rs 200 notes. On 25 July, Mint reported that RBI had shifted focus from printing Rs 2000 notes to Rs 200 notes of which a billion were expected to be printed.
On Wednesday, economic affairs secretary Subhash Chandra Garg tweeted: “Govt has today specified denomination of banknote of Rs 200 value. Soon this note will get added to the bucket of currency notes in India.”
Finance minister Arun Jaitley said RBI will decide the date for issuing the new Rs 200 notes.
He added that the government is not considering withdrawal of the Rs 2000 currency notes.
RBI had on 18 August announced that a new Rs 50 note will be issued shortly under the Mahatma Gandhi series, while notes issued under the earlier series will remain legal tender.
In a surprise announcement, Prime Minister Narendra Modi on 8 November 2016 announced scrapping of old Rs 500 and Rs 1000 currency notes, wiping out over 85% of the cash in circulation.
RBI data shows that currency in circulation stood at Rs 15.70 trillion as on 11 August, over nine months after demonetisation. This is about 88.70% of the Rs 17.7 trillion that was in circulation on 4 November 2016.
Introduction of a Rs 200 note will fill in the “missing middle”, State Bank of India (SBI) said in a report in July. The report had noted that though there has been a significant move towards shifting distribution of currency to smaller denominations post demonetisation, there is a mismatch caused by the presence of Rs 2000 notes right after Rs 500 notes.
“Herein lies the paradox. Notes of Rs 2000 denomination in ATMs may find few takers because of missing middle—the Rs 200 note,” the SBI report added.