The amount of Rs 500 (new notes) counterfeit notes has risen by 121% over the previous year, while counterfeit Rs 2,000 notes rose 21.9%, according to the annual report.
India’s monetary or liquidity conditions returned to pre-demonitisation levels in FY19, with the currency in circulation (CiC) increasing by 17% over the previous year to Rs 21.1 lakh crore. According to the RBI annual report, currency in circulation formed 87% of the expansion of reserve money (RM) — an analytical representation of the central bank’s balance sheet, focusing on its liabilities. The spurt in currency circulation is attributed to election-related spending in Q4FY19.
However, even as the CiC grew, the currency-GDP ratio remained lower than the 11.6-12.2% levels observed during pre-demonetisation period. A lower currency-GDP ratio means that lower transactions are being done with cash. The space vacated by cash appears to have been occupied by retail digital payments, observed the report. While liquidity situations improved during the year, the amount of counterfeit notes witnessed a surge over the previous year.
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The amount of Rs 500 (new notes) counterfeit notes has risen by 121% over the previous year, while counterfeit Rs 2,000 notes rose 21.9%, according to the annual report. In value terms, the share of Rs 500 and Rs 2,000 banknotes, which had together accounted for 80.2% of the total value of banknotes in circulation at end-March 2018, increased to 82.2% at end-March 2019.