Printing of Rs 500 notes doubles, but shortage sparks rumours

MUMBAI: Currency notes of the new Rs 500 denomination continues to be in short supply. Much of the new cash that banks are getting are in notes of Rs 2,000.

The continued cash shortage has led to rumours that the government has stalled printing because of glitches, but the Reserve Bank of Indiahas assured that the supply of Rs 500 notes is on. In fact, printing has been more than doubled.

"The absence of the Rs 500 note in the system is reducing the acceptability of the higher value Rs 2,000 note. Without the Rs 500 note, not to mention Rs 100, customers are not able to get change for the highest denomination note. But lower value notes are not circulating," said an official with a private bank. More notes of Rs 500 would also ease the pressure on ATMs.

Last week, there were several instances where the new Rs 500 notes were found to vary from one another. The difference in printing led to fears that some of them might be fakes. But the RBI clarified that some notes may have been released with printing defects, but they continue to be legal tender.

Prior to demonetisation, over 1,660 crore pieces of Rs 500 notes were in circulation, representing nearly Rs 8.3 lakh crore of total currency in circulation. Bankers say that now, less than Rs 2,000 crore in new Rs 500 notes has come in.

Sources say the currency presses owned by the government at Nashik and Dewas are printing Rs 500 while the RBI's currency presses in Salboni (West Bengal) and Mysuru are printing Rs 2,000 and Rs 100 notes. At the Currency Note Press at Nashik, the capacity has been more than doubled to this week 80 lakh pieces (Rs 400 crore) a day.