Study

On
Status of RBI Clean Note Policy in Bihar and Jharkhand

Summer Internship Project Report

For
Post-Graduate Programme in Management

By
Anish Maurya
MBA/1107/07
Under the guidance

Of

Amit Kumar Prof. Anirban Sengupta

Managers Assistant Professor
Issue Department IIM Bodh Gaya
Reserve Bank of India, Patna

[1]
STUDENT DECLARATION

I solemnly declare that the project report “Status of RBI Clean Note Policy in Bihar and
Jharkhand” is based on my work carried out during the course of our study under the supervision
of Shri. Amit Kumar, Manager, Issue department, Reserve Bank of India, Patna.

The work I have done does not breach any rules and no portion of this project is copied from any
work done earlier for a degree or otherwise. I further undertake to indemnify the organization
against any loss or damage arising from breach the foregoing obligations. All the work done is
genuine and the report is prepared based on observations.

I do hereby declare that the work presented in this internship report has been carried out by me
and has not been previously submitted to any other place for academic qualification.

Anish Maurya
IIM Bodh Gaya
Summer Intern 2022

[2]
ACKNOWLEDGEMENT

Working with the Reserve Bank of India, Patna, for my summer internship under its ‘Summer
Internship Scheme 2022’ was revealing and engaging. During this internship, I learned a lot about
the Reserve bank’s currency management, especially the Status of the RBI Clean note Policy in
Bihar and Jharkhand and Currency in circulation. Therefore, I am grateful to the Human
Resource Management Department, RBI Patna, for providing me with this opportunity to associate
with the Indian central bank. I express my sincere gratitude and special thanks to Shri Amit
Kumar, Manager, Issue Department, RBI Patna, who, despite being extraordinarily busy with
his duties, took time out to hear, guide, and keep me on the correct path and enabled me to do my
summer internship at this eminent institution. His coordination to provide required data, help in
analyzing data to draw conclusions, and guidance to modify & structure the report was revealing
and significant. I am also indebted and thankful to Prof. Anirban Sengupta, Assistant Professor,
Indian Institute of Management, Bodh Gaya, for her guidance and constant supervision during
my summer internship. His role in providing the necessary information and her support in helping
me understand the technicalities and the strategic planning regarding the report was substantial. I
hope to build upon the experience and knowledge that I gained and make a valuable contribution
to the institute in the future.

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EXECUTIVE SUMMARY

The currency management operation is one of the essential components of the Indian economy.
The RBI issue offices, printing presses and mints, currency chests, and banks, in general, are the
main stakeholders. They work in tandem to fulfill the currency requirement as per the demand and
withdraw the unfit currency from the system at regular intervals. The distribution of currency
happens through various currency chests which act as the pivots of the system. The RBI is the sole
issuer that has a semi-retail model of the currency supply. The currency chests being the pivotal
element of the value chain, are essential for the system.
During the internship, I am analyzing the Examination of the status of clean note policy in Bihar
and Jharkhand, Examining the quantum of and changes in Currency in Circulation in Bihar with
respect to its population, cash behaviour, etc. and will provides some recommendations for
furthering clean note policy in these geographical areas.

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ABSTRACT

The primary objective of this study was to determine the Status of RBI Clean Note Policy in the
Bihar and Jharkhand. The Department of Currency Management of RBI has the sole responsibility
of administering the functions of currency management, a core function of the Reserve Bank in
terms of the Reserve Bank of India Act, 1934. Currency management essentially relates to the
issue of notes and coins and the retrieval of unfit notes from circulation. In the Bihar and Jharkhand
region, this work is performed through the Issue Office of RBI Patna with a wide network of 190
currency chests (81 in Jharkhand and 132 in Bihar state) and various Linked bank branches being
managed by commercial banks. The project includes the study of Examination of the status of
clean note policy in Bihar and Jharkhand, Examining the quantum of and changes in Currency in
Circulation in Bihar with respect to its population, cash behaviour, etc. To provide
recommendations for furthering clean note policy in these geographical areas, RBI circular
analysis, problems and suggestions for CCs, rationalization and expansion analysis of CCs. This
report also emphasizes the trend line and growth analysis of the Soiled Note, Fresh Note, and
Currency in Circulation (CIC) of all the denominations in Bihar and Jharkhand circle. Secondary
research performed includes extensive analysis of RBI’s website, RBI currency management
practices, publications, primers and write-ups by senior managers, monthly and annual reports,
etc. Primary research includes discussions with the senior managers and collection of data from
the RBI Patna Issue Department. The data obtained and discussions held were analyzed to
understand the clean note policy in Bihar circle.

Key Words: Currency Management, Currency Chest, RBI, Notes and Coins, CBL, Currency
Distribution.

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TABLE OF CONTENT

Serial No. Contents Page No.

1. Executive summary 2
2. Introduction 10
3. Literature review 11
4. Objective and Methodology 12
5. Currency management 13to16
6. Currency Management in India 13
7. History of paper currency in the country 14
8. New security features of Indian banknotes 15&16
9. Growth in currency circulation with GDP 17&18
10. Currency distribution system 19&20
11. Note Printing Presses in India 21
12. Currency management mechanism 22
13. Currency chest 23
14. Minimum standard for Currency Chest 24
15. Rationalization of currency chest 24&25
16. Clean note policy 26&27
17. Processing and Disposal of currency 28
18. Types of Notes 29
19. Disposal of Soiled Banknote in India 30
20. Number of Counterfeit notes detected in India 31
21. Analysis on clean note policy in Bihar and Jharkhand
22. Analysis of Paid notes in Bihar and Jharkhand 32&33
23. Analysis of Fresh notes in Bihar and Jharkhand 34to36
24. Analysis of Soiled notes in Bihar and Jharkhand 37to41
25. Analysis of Re-issuable note in Bihar and Jharkhand 42to45
26. Trends in currency
27. Banknotes in Circulation 46&47

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28. Coins in Circulation 48
29. Demand estimation and supply of currency
30. Indent and Supply of Banknotes 49
31. Indent and Supply of Coins 50
32. Analysis of banknote circulation in Bihar and Jharkhand 51
33. Analysis of currency in circulation in Bihar and Jharkhand 52&53
(denomination wise)
34. E-transaction 54
35. E-transaction in Bihar 55
36. Survey on Quality of Indian Currency Notes 56&57
37. Conclusion and Recommendations 58
38. References 59

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LIST OF TABLES

Table No. Tittle Page No.

1. Proposed specification/Security feature 16
2. Cash to GDP ratio for India 17
3. Currency chest and small coin depots 23
4. Disposal of Soiled banknote (pieces in lakh) 30
5. No. of counterfeit notes detected (No. of pieces) 31
6. Denomination wise detection of counterfeit notes (No. of pieces) 31
7. Analysis of paid notes in Bihar and Jharkhand 33
8. Analysis of fresh notes in Bihar and Jharkhand (LDN) 34
9. Analysis of fresh notes in Bihar and Jharkhand (HDN) 36
10 Analysis of Soiled notes in Bihar and Jharkhand (LDN) 37
11 Analysis of Soiled notes in Bihar and Jharkhand (HDN) 41
12. Analysis of Re-Issuable notes in Bihar and Jharkhand (LDN) 43
13 Analysis of Re-Issuable notes in Bihar and Jharkhand (HDN) 44
14. Bank notes in Circulation (in India) 46
15. Coins in Circulation (in India) 48
16. Indent and Supply of Banknotes by BRBNMPL and SPMCIL 50
17. Indent and Supply of Coins by BRBNMPL and SPMCIL 51
18. Banknote circulation in Bihar and Jharkhand 52
19. Banknote Circulation in Bihar and Jharkhand of High denomination 52
20. No. of e-transactions in India 54
21. No. of e-transactions in Bihar 55

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LIST OF FIGURES

Figure No. Tittle Page No.

1. CIC/GDP Ratio (%) 18
2. Currency Distribution System 20
3 Note Printing Presses in India 21
4. Hub and Spoke Model 26
5. Currency Withdrawal System 27
6. Paid Note Analysis 33
7. Paid Note Analysis (Denomination wise) 33
8. Fresh Note Analysis 36
9. Fresh Note Analysis (Denomination wise) 36
10 Soiled Note Analysis 41
11 Soiled Note Analysis (Denomination wise) 41
12 Re-Issuable Note Analysis 45
13 Re-Issuable Note Analysis (Denomination wise) 46
14. Banknotes Circulation in India (in values) 48
15. Banknotes Circulation in India (in pieces) 49
16. Coins in Circulation in India (in values) 50
17. Coins in Circulation in India (in pieces) 51
18. Banknote circulation in Bihar and Jharkhand 52
19. Banknote Circulation in Bihar and Jharkhand (denomination wise) 53
20. No. of e-transactions in India 54
21. No. of e-transactions in Bihar 55
22. Gender Participation 56
23 Category of Participants 56
24. Area 56
25. Annual Income 56
26. Quality of Indian currency notes 57

[9]
INTRODUCTION

The Reserve Bank of India is the only institution in India authorised to print new currency notes
and coins. Although the Reserve Bank of India (RBI) issues one-rupee notes and coins as well as
subsidiary coins, the quantity of these items is quite low. These are issued solely by the
Government of India and can be placed into circulation only by the Reserve Bank. This jurisdiction
has been delegated to the Reserve Bank due to the fact that it is accountable for guaranteeing that
there will always be a sufficient supply of currency designed to make it easier for the government
and the public to conduct business requirements of banks and the general public for currency
exchange and remittances. With the increase in the size and scope of economic activity and growth,

During this time period, the total volume of cash that is in circulation has increased by more than
200 times, the past half a century. In recent times, it has come to everyone's attention that the
majority of the notes in circulation were soiled and mutilated, and people no longer believed them
to be a reliable medium of exchange. Nobody was willing to accept these notes, on the other hand,
if someone obtained these notes, they desired to get rid of them as soon as possible.

To find a solution to this issue, The Reserve Bank of India implemented a variety of steps to boost
the country's economic growth. On the one hand, a supply of clean notes, and on the other, removal
of soiled and mutilated notes from the circulation known as "Clean Note Policy”. This note makes
an effort to do an analysis of how far these measures have been successful in bringing about an
improvement in the circumstances at the time, and offering a fresh course of action for the
management of the currency.

In spite of the fact that its significance has been diminishing over the course of the years as a result
of the growing monetization of the economy and the expansion of banks, currency continues to
constitute a sizeable portion of the money supply in India.

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LITERATURE REVIEW

The study presents on extensive survey of literature on various aspects of currency circulation
from the central bank’s perspective of currency management. The review of the literature focuses
on the international evidence due to paucity of studies in the Indian context. The study has
identified various factors influencing clean note policy in Bihar and Jharkhand and analysed the
behaviour and characteristics of currency circulation and its relationships with the population of
Bihar and Jharkhand.

The modelling of the demand for- currency at the aggregate level for both annual and quarterly
frequencies has allowed examination of the long-term behaviour as well as short-term dynamics.
In view of considerable volatility of circulation of individual denominations and limitations
relating to the availability of quarterly data, the study has identified suitable denomination groups
of banknotes that are amenable to the development of similar models based on annual data.

One of the most important duties of a central bank is the administration of money, which also
attracts a significant amount of public attention because of its importance. The Reserve Bank of
India Act, which was passed in 1934, has laws about monetary policy, which is where the Reserve
Bank of India gets its authority to regulate India's currency. According to Section 22 of the
aforementioned Act, the Reserve Bank of India is the only entity authorized to issue money in the
country of India.

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OBJECTIVE

Following are the objectives of the study-

• Examination of the status of clean note policy in Bihar and Jharkhand.

• Examining the quantum of and changes in Currency in Circulation in Bihar with respect to
its population, cash behaviour, etc.
• To provide recommendations for furthering clean note policy in these geographical areas.

METHODOLOGY
This study relied on both primary and secondary data. The organization has provided primary
data, which has been supplemented by secondary data from a variety of sources.

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CURRENCY MANAGEMENT

Currency Management is one of the RBI's core functions, and it is mandated by the central bank's
statutory responsibility in the Preamble of the Reserve Bank of India Act, 1934, which mandates
the central bank to regulate the issue of bank notes and the keeping of reserves with a view to
preventing inflation.

It also Includes:

1. To provide monetary stability in India and, more broadly, to run the country's currency and
credit markets
2. To use the country's monetary system to its advantage; to establish a contemporary
monetary policy framework to fulfill the needs of the country
3. Managing the challenges of an increasingly complex economy, such as maintaining price
stability while also maintaining economic growth.

The Reserve Bank of India is entrusted with the function of currency management and note issue
by the preamble to the Reserve Bank of India Act, 1934 by the specific provision of section 3 of
the Act. It has the sole currency authority under section 22 of the issue of banknotes. Section 38
requires the government to circulate the one-rupee coins and one-rupee notes through RBI only.
The function of note issue and currency management is discharged through its 18 regional
offices/sub-offices and through a currency chest which is maintained by the different banks and
government treasuries spread across the country. The legal paper currency in India exists in the
denomination of ₹5, ₹10, ₹20, ₹50, ₹100, ₹200, ₹500, and ₹2,000.

Currency Management in India: The Department of Currency Management has the task of
managing the functions of currency management, a basic role of the Reserve Bank under
provisions of the Reserve Bank of India Act, 1934. Currency management mainly pertains to the
issue of notes and coins and the recovery of unsuitable notes from circulation. This task is
accomplished by 18 issue offices of the Reserve Bank and a large network of 4195 currency chests,
488 repositories, and 3562 small coin depots controlled by banks and Government treasuries.

The Department of Currency Management (DCM) is overseen by a Chief General Manager who
is in charge of the whole department. Among the departments are a planning division; resource

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management and remittance of treasure division; note processing and data analysis division; note
exchange division; currency chest division; security and discipline cell; inspection follow-up,
coordination, and development division; forged note vigilance cell and the museum cell; staff cell;
and administration division. The Department also has a forgery-prevention cell and an exhibition-
prevention cell.

HISTORY OF PAPER CURRENCY IN THE COUNTRY

Coins of various designs, shapes, and materials have been used as a means of commerce in India
for thousands of years, and the tradition continues today. It was during the latter half of the 18th
century that paper currency first appeared, in the form of promissory notes issued by the royal
treasuries and commercial banks. These paper currencies/notes were produced by the Bank of
Hindostan (1770-1832), the General Bank of Bengal and Bihar (1773-75), the Bengal Bank (1784-
91), the Commercial Bank (1819-1828), and other financial institutions throughout India.

According to the Paper Currency Act, 1861, the duty for the issuance of currency notes, which had
previously been distributed among private and Presidency banks, was vested completely in the
Government of India by this Act. From that point forward, the Government of India retained the
exclusive right to print banknotes. Since then, many currency circles have been established to meet
the currency requirements of the entire country's geographical region. The Currency Department
was established in order to consolidate the government's currency issuance function. As for issuing
and redemption agents, the Presidency banks were designated by the President. Office of the
Controller of Currency was founded in 1913, taking the place of the Currency Department in the
federal government. With the passage of the Reserve Bank of India Act, 1934, the role of issuing
banknotes was transferred from the Controller of Currency to the RBI in 1935. Since then, the RBI
has been the sole note issuer in the country. The currency-issuing authority and the entity in charge
of the country's currency administration.

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New Security Features of Indian Banknotes:

Counterfeiting is one of the major issues plauging the issuers of currency notes. Latest growth in
computer technologies and photography, along with the accessibility to low-cost tools has made
the manufacturing of counterfeit money relatively easy. To prevent this menace and always stay
one step ahead of the counterfeiters, RBI is updating its currency regularly by adding security
features to the banknotes. These security features make the banknotes less prone to counterfeiting.

Feature Denomination Proposed specification/Security feature

Watermark All This consists of an image that is visible when the bank
Note is held up against the light, which is created during
the manufacturing process such that it is an integral part
Of the paper.

Security Thread Colour shifting windowed security thread is present in

Denomination of Rs 100 and above the colour of which
Changes from green to blue when the note is tilted.
Rs 10 Window demetallized security thread with inscriptions
‘Bharat’ and ‘RBI’ is present.
Rs 20 Window demetallized security thread with inscriptions
‘Bharat’ and ‘RBI’ is present.
Rs 50 Window demetallized security thread with inscriptions
‘Bharat’ and ‘RBI’ is present.
Rs 100 The inscriptions ‘Bharat’ is present in denominations.
Rs 200 The inscriptions ‘Bharat’ is present in denominations.
Rs 500 The inscriptions ‘Bharat’ is present in denominations.
Rs 2000 The inscriptions ‘Bharat’ ‘RBI’ ‘2000’ is present in
denominations.

Latent Image The latent Image is a security feature that is concealed

Within the note. It is visible only when it is held
Horizontally at eye level.
Rs 100 and Latent image with the denomination of the numerical is
above
Visible at the bottom left corner, when the note is
Held at 45degree angle from the eye level.

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Micro lettering These are minute inscriptions which can be only read
Under a microscope/magnifying lens for higher capacity
All Appears on the left shoulder of the Mahatma Gandhi
denominations portrait with inscriptions ‘Bharat’ and ‘India’.

Intaglio Printing Raised Printing which are due to deposits of ink and can
Be felt on touch.
Rs. 100 and The portrait of Mahatma Gandhi, the Ashka Pillar
above Emblem, Guarantee clause, Governor’s signature,
Promise clause, RBI Emblem, Bleed lines and the
Identification marks are in intaglio.

See through The see-through register is a design that is printed

Register partially on both sides of the note, exactly opposite of
Each other, and looks like one single design when seen
Against the light.

Colour Shifting Rs. 200 and The rupee symbol and denomination is written in the
Ink above observe of the Note in colour shifting ink.

Ascending font Font size of the number in the number panel is

Of numbers Increasing from left to right.

Angular bleed Set of lines in raised prints at the left corner of the note
lines slightly above the Ashoka Emblem
Rs 100 4 lines (in 2 set of 2)
Rs 200 4 lines (in set of 2 separated by two circles)
Rs 500 5 lines (in set of 2-1-1)
Rs 2000 7 lines (in set of 1-2-1-2-1)

Fluorescence Optical fibers and florescent ink is used which glows

When exposed to ultraviolet light. Optical fibers are dual
Coloured (i.e., each fiber shows two colours) are in
Combination of red/yellow and blue/green.

Identification This feature helps visually impaired to identify the

marks Denomination.
Rs 100 It is a Triangle
Rs 200 It is ‘H’ shape

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 Rs 500 It is a circle
Rs 2000 It is a rectangle

Table 1: Proposed/security feature of Banknotes

GROWTH IN CURRENCY CIRCULATION WITH GDP

According to the Annual Report of the Reserve Bank of India (RBI) for 2021-22, the number of
banknotes in circulation grew as compared to the previous year by 10.98%. The country's total
amount of currency in circulation (CIC) saw a compound annual growth rate (CAGR) of 10.2
percent over the fiscal years 2014-2015 and 2018-2019. As can be seen in the table below, the
value of the currency that is now in circulation as of the year that will conclude in March 2021 is
28.26 Lakh Crore. The following figure presents, from the year 2005 through the year 2020, the
total value of notes that will have been in circulation.
Cash to GDP ratio for India
Financial Bank notes in Circulation Nominal GDP (Rs. Cr) CIC/GDP Ratio (%)
year Value (Rs Cr)
2005-06 421911 3632125 11.62%
2006-07 496138 4254629 11.66%
2007-08 581598 4898662 11.87%
2008-09 681113 5514152 12.35%
2009-10 788299 6366407 12.38%
2010-11 935856 7634472 12.26%
2011-12 1066100 8736329 12.20%
2012-13 1180100 9944013 11.87%
2013-14 1300200 11233522 11.57%
2014-15 1448300 12467959 11.62%
2015-16 1663300 13771874 12.08%
2016-17 1335200 15391669 8.67%
2017-18 1829300 17090042 10.70%
2018-19 2110892 18886957 11.18%
2019-20 2420975 20351013 11.90%
2020-21 2826863 19745670 14.32%
2021-22 3105721 23660000 13.13%
Source: RBI
Table 2: Cash to GDP ratio for India
The year-to-year movements in currency-GDP ratio reveal an constant trend from 2005-06 to
2014-15. The rise in the Currency-GDP ratio has, interestingly, occurred at about the same time

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that there have been developments in alternative modes of payments, a marked increase in the
proportion of services to GDP, increased opportunity cost and lower transactions costs of holding
currency. However, the ratio has started showing a growth in the last three years.
Nearly 14 percent of India's total gross domestic product was represented by the country's currency
that was circulating in the economy in the fiscal year 2022. Since the demonetization that took
place in 2017, the CIC-ratio has significantly increased once more. During periods of rapid
economic expansion in India, the country's CIC as a percentage of GDP reached historically high
levels. In spite of the economic downturn brought on by the coronavirus (COVID-19) pandemic
and the similarly increasing prevalence of digital payment methods, it is anticipated that the CIC-
ratio will increase during the fiscal year 2021.

CIC/GDP Ratio(%)
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%

Figure 1: CIC/GDP Ratio (%)

Currency Distribution system: Three currency distribution schemes are now in use in various
nations throughout the world, each with its advantages and disadvantages:

➢ Wholesale model: This method is popular in Australia, where commercial banks acquire
banknotes directly from the central bank. Before being deposited, these banknotes are
carried out and processed by the banks at the authorized cash centers situated throughout
Australia.

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 ➢ Retail Model: Under the retail model, which is used in China and France, the central bank
establishes its stocking locations to meet the currency requirements of the general public
and other institutions.
➢ Semi-retail model: In accordance with the semi-retail model, India's currency notes are
made available to currency chest branches of banks at their doorsteps, as has been the case
with most central banks worldwide. The central bank is responsible for the costs of
transportation and other relocating expenses. The banks are only obligated to cover the
fixed costs associated with keeping the cash vault.
As part of a semi-retail approach, the notes and coins are disseminated through the network of RBI
Issue offices, currency conversion centers/stationary currency distribution centers, bank branches,
and ATMs in the following ways:

Figure 2: Currency Distribution system

The Reserve Bank of India (RBI) has authorized selected banks/branches of banks to build
currency chests in order to expedite the circulation of notes and rupee coins throughout the country.
In addition to the previously stated currency chests, currency vaults are storage facilities where

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banknotes and rupee coins are kept in sufficient quantities so that cash is readily available to
members of the general public across the country. Each month, the Reserve Bank's Issue offices
send periodic remittances of new/re-issuable banknotes and rupee coins to these Currency Chests
for storage. Agency banks and associated bank branches are allowed to use them to satisfy their
clients' needs in their respective jurisdictions. Extra and non-issuable notes (including Re 1 notes
and coins) are stored in currency chests to be used for future transactions. The notes and coins are
purchased into circulation and removed from circulation through the RB's issue offices and the
currency chest, respectively

The Reserve Bank of India (RBI) is gradually retreating from the retail distribution of money by
providing clients with better access to exchange services through neighboring bank branches.
Several banking experts have encouraged banks to improve their currency distribution methods
and procedures in order to meet the increased demand for cash among the general people.

Note Printing Presses in India: Notes are sent to the Department via four different Currency note
production facilities. Currently, the Reserve Bank, through its fully owned subsidiary Bhartiya
Reserve Bank Note Mudran Private Ltd (BRBNMPL), owns two of the currency note printing
presses in India, while the Government of India owns two of the currency note printing machines,
Security Printing and Minting Corporation of India Limited (SPMCIL). Nasik (in Western India)
and Dewas (in Central India) are the locations of the government-owned presses (Central India).
The other two presses are located at Mysore (in southern India) and Salboni (Eastern India).

Figure 3: Note Printing presses

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Currency Management Mechanism: RBI manages the country's currency through a network of
issue offices and currency vaults, which it maintains. In order to facilitate the opening of a currency
chest, an initial remittance of banknotes and rupee coins is organized either from the Issue Office,
under whose authority the currency chest operates, or by diversion from a chest inside or outside
the circle. A variety of administrative instructions to currency chests, including information on
banknotes and coins, new series of banknotes/coins, changes in process, and other topics, are
issued on a regular basis.

Specifically, each RBI Issue Office is responsible for the supply and withdrawal of banknotes,
coins, and other currency from the vaults within its circle. The yearly demand for currency chests
for notes and coins is determined by the indents provided by the chests through their link offices,
which are then evaluated. Annually, currency chest branches are required to make a realistic
assessment of their requirements and to forward their banknotes and coins indentures (by chest
and denomination) to their respective link offices, which in turn submit a consolidated chest-wise,
denomination-wise indenture for notes and coins to the respective Issue Offices. The excess and
dirty banknote balances, as well as the surplus and withdrawn coins, which are needed to be taken
from the currency chests, must also be indicated in their indents.

Banknotes and rupee coins that are deemed inappropriate for further circulation or that cannot be
produced for further circulation, as well as those that are not necessary for the urgent needs of the
branches, are put in the chests. They are returned to the Issue Office after they have accumulated
a sufficient number of non-issuing banknotes for that particular office. Currency chests eliminate
the need for regular physical transfer of currency, allowing banks and treasuries to operate with a
bare minimum of cash on hand at any given time.

It is also possible for Issue Offices to meet the demand for currency chests by arranging deliveries
from other excess chests through the use of diversion orders issued by other offices. Supply chests
from which supplies may be taken and deficit chests to which supplies can be transferred are
identified using a database of chests maintained at the RBI's Issue Offices, which is updated on a
regular basis.

They can deposit their excess cash with, or acquire their cash requirements from, the bank branches
that hold currency chests at the same or a different location. This also aids in the pooling of dirty

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banknotes amassed at non-chest bank branches with those gathered at chest bank branches for
subsequent transfer to the Issue office when the time is right. It is mandatory for non-chest
branches to separate banknotes into two categories: re-issuable and soiled/non-issuable, before
depositing the banknotes with the chest branch to whom they are remitting their cash.

Currency Chest: The currency chests are basically an extension of the RBI’s Issue Department,
which has been established in various locations around the country to suit the currency needs of
the general population. Currency chests, which are located in authorized branches of public and
private sector banks, regional rural banks, and urban cooperative banks, serve as safe-keeping
facilities for banknotes and rupee coins. Despite the fact that no currency chests may currently be
opened with treasuries or sub-treasuries, there have been some currency chests opened in the past
with non–banking district treasuries and sub treasuries when the number of transactions is of a
suitable magnitude. Reserve Bank has established agency relationships with banks, under which
the banks are provided access to the Reserve Bank's currency chest facility. The State Bank Group
maintained to hold the biggest proportion of currency chests (53.6 %), followed by nationalised
banks and other financial institutions.

Small Coin Depots: The Government of India has constructed small coin depots at the branches
of several financial institutions. The Bank makes arrangements to ensure that these depots are fully
supplied, allowing the treasury or bank in question to withdraw tiny coins in demand from these
inventories as they become available. They also return to the depots any remaining balances that
are in excess of their requirements for the time being. Because the depots are the property of the
Government of India, all withdrawals or deposits made in them are credited or debited from the
government's account.

Currency Chest and Small Coin depots (March’22)

Category No. of Currency Chest No. Small Coin Depots
State Bank of India 1544 1291
Nationalized Banks 1067 832
Private Sector Banks 253 160
Cooperative Banks 5 4
Foreign Banks 4 3

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 Regional Banks 4 5
Reserve Bank of India 1 1
Total 2878 2296
Source: RBI
Table 3: Currency chest and small coin depots

Minimum standard for Currency Chest: The Committee on Currency Movement advised
[chairperson Shri D. K. Mohanty, Executive Director] that RBI, encourages banks to open huge
Currency Chests with contemporary amenities. As a result, the RBI has undertaken a
rationalization of the number of central banks in order to have an optimal number of large modern
central banks with sufficient capabilities for mechanized processing, large storage capacity, and
faster transportation facilities in order to provide better customer service by making available good
quality genuine notes to bank branches and members of the general public. Therefore, the Reserve
Bank encourages banks to open big Currency Chests and has established the following minimum
conditions for the establishment of new Currency Chests:

1) A strong chamber or vault with a minimum floor space of 1500 sq. ft. For those located in
hilly or difficult areas (as determined by the central / state government/ any relevant body),
a strong room/ vault with a minimum floor space of 600 sq. ft. is required for protection.
2) In addition, a daily processing capacity of 6,60,000 pieces of banknotes is available. There
is a daily capacity of 2,10,000 pieces of banknotes for individuals who live in mountainous
or remote areas.
3) Suitability for automation and flexibility in the implementation of information technology
solutions.
4) A CBL of Rs. 1000 crore, subject to the realities of the situation and reasonable constraints,
at the discretion of the Reserve Bank.
5) Adherence to other DCM technical standards for the building of CCs that are currently in
effect.

[23]
RATIONALIZATION OF CURRENCY CHEST

The Report of the High-Level Group on Systems and Procedures for Currency Distribution, which
was published in 2009, made the recommendation that, as a result of technological advancements
in note processing and improved transportation and communication facilities, the existing cash
distribution channels need to be reassessed. This would result in greater efficiency in the
management of currency operations. The CCs of an Issue Circle can be mapped in the area to
determine the locations in the region where they are required based on the volume of transactions,
ease of cash movement, remoteness of the area/topography, and distance. These factors are taken
into consideration when determining the locations. The continuation of the currency chest for
catering to Government business/members of the public in the remote/under-banked areas will also
be factored into the decision. These Currency Chests could then be upgraded by the banks
with technology, and the banks could turn this into a profitable business model by charging other
banks for the service of processing their customers' notes. A program for closure of superfluous
currency chests and opening of new chests in areas where such chest has been found necessary
may be undertaken by the Issue Office. This has also been emphasized by the Committee on
Currency Management (2017) and High-Level Committee on Currency Storage and Movement
(2018).

One of the methods to distribute Currency to the CCs is by using the Hub and Spoke model. With
advanced technology and improved logistics, RBI has adopted this model wherein a network of
CCs is categorized as Hub and Spoke in such a manner that each Spoke is catered by a neighboring
Hub, which in turn is connected to the Issue Office of RBI. The fresh banknotes are remitted to a
large CC, which acts as a Hub. These Hub CCs are large in capacity and are located in a district to
cover a designated area. The hub chest supplies the fresh bank notes to the smaller chests as and
when required. The smaller CCs act as the spokes in the distribution system. These smaller CCs
then fulfill the requirements of the non-chest branches as per the demand.

The benefit of using such a model is that the spoke CCs do not need to keep a high cash balance
which reduces the processing cost and better inventory management. A depiction of the same is
shown in the figure below.

[24]
 Hub

Figure 3: Hub and Spoke Model

CLEAN NOTE POLICY

The Reserve Bank of India has instituted a procedure via which notes that have become unclean,
stained, or ripped as a result of extensive circulation are removed from circulation. According to
Section 27 of the RBI Act, 1934, the RBI is mandated to guarantee that only clean notes are in
circulation, and in order to accomplish this obligation, filthy notes are removed from circulation
and returned to issue offices for additional verification and processing before being destroyed. At
the same time, the number of note examination sections and employees hired for the examination
of dirty and damaged notes were expanded. This was done so that the Bank would be able to retire
and replace notes that were highly filthy, faulty, or mutilated as quickly as possible. In spite of
these efforts, the number of claims in respect of dirty and damaged notes was growing by leaps
and bounds, and the quality of notes that were now in circulation was rapidly decreasing. Using
the practices and procedures that are already standard in currency management rendered it
impossible to manually process these claims while also preserving the quality of the notes that are
currently in circulation at the level that was wanted. Therefore, there was no longer a choice to be
made; rather, there was an absolute necessity to bring the strategies and procedures of currency
management up to date with the most recent technological advancements and the most successful
policies from across the world.

[25]
As a direct result of this, the "Clean Note Policy" of the Reserve Bank of India was introduced
in January 1999 by Dr. Bimal Jalan, who served as Governor at the time. It is as vital to remove
filthy and damaged notes from circulation as it is to introduce new notes into circulation in order
to carry out the 'Clean Note Policy' in an efficient manner.

To automate the examination, authentication, counting, sorting, and destruction of notes received,
the RBI employs currency verification processing systems (CVPS) that are accessible online.
When the non-issuable notes have been processed, they are automatically dispatched from CVPS
to the Shredding and Briquetting facility (SBS). After shredding the notes, the SBS transforms
them into briquettes for burning.

The following diagram depicts the method by which dirty or soiled notes are recovered and
processed from the system:

Figure 4: Currency Withdrawal System

[26]
PROCESSING AND DISPOSAL OF CURRENCY

➢ Currency Verification and Processing system: According to the Reserve Bank's clean
note policy, it is the bank's responsibility to guarantee that the currency in circulation is of
high quality. According to Section 27 of the Reserve Bank of India Act 1934, the bank is
prohibited from reissuing notes that have been ripped, defaced, or severely filthy. Fresh
notes are delivered to currency chests on a regular basis, while dirty notes that have
collected in currency chests are regularly removed by arranging remittances to the Bank.
This helps to preserve the quality of the notes in circulation. Soiled notes that have been
received from currency chests are processed/sorted with the use of automated systems such
as Currency Verification and Processing Systems (CVPS). Notes arriving at the Bank are
examined, authenticated, counted, separated, and destroyed using the CVPS, which is a
web-based application. Note Examination Sections, Verifications Sections, and Cancelled
Note Vault operations are all performed concurrently on an online basis via the Cancelled
Note Processing System (CVPS).
The notes fed into the CVPS will be sorted into four categories:
i. Fit(re-issuable) Notes
ii. Unfit(non-issuable) Notes
iii. Suspect Notes
iv. Reject Notes
➢ Shredding and briquetting system: This automated Shredding and briquetting system is
developed for the efficient, safe, and ecologically friendly destruction of banknotes and
other paper cash. Its typical processing rate at most workplaces is around 170 kg per hour,
and it has the potential to load a total of 750 kg at a single time (about 9 lakh pieces). A
group of people known as the Joint Custodians of the Retired Note Vault is in charge of
the system, and they will be responsible for overseeing and operating it on a daily basis.
The operating cycle consists of the following process:
i. Loading
ii. Disintegration/ shredding
iii. Briquetting

[27]
 ➢ Note Sorting Machines: Note Sorting machines are used to sort banknotes into their
respective denominations. Note sorters can sift through a large quantity of banknotes and
organize them according to denomination. It can count money as well as separate it into
different groups, and it also has the capability of functioning as a banknote counter. Using
the security characteristics of the banknote, certain types of note sorters are also able to
identify counterfeit money.

TYPES OF NOTES

Definition of Soiled Notes: A soiled note is a note that has become dirty as a result of normal
wear and tear. It also includes a two-piece note that has been pasted together and in which both of
the pieces presented belong to the same note and together form the entire note with no essential
feature missing (also known as a "two-piece note"). These notes should be accepted at bank
counters for the payment of government obligations as well as for the crediting of accounts held
by members of the public with financial institutions. Although these notes are not re-issuable, they
should not be distributed to the general people. Instead, they should be put in currency chests and
then sent to RBI offices for further processing as "soiled note remittances.

Definition of Mutilated Notes: Mutilated notes are those in which a section of the note has been
removed or which are made of more than two components. Notes that have been tampered with
may be presented at any of the bank's branches. The notes that have been submitted will be
accepted, exchanged, and judged in line with the Note Refund Rule, 2009.

Definition of Counterfeit Notes: Counterfeit money is money that has been made without the
legal permission of the state or government, generally in an intentional attempt to duplicate that
currency to fool the person who has received it. Whether created or used, fake money is considered
a type of fraud or forgery and is thus illegal.

DISPOSAL OF SOILED BANKNOTE IN INDIA

The disposal of dirty banknotes was first slowed down in 2020-21 because of the COVID-19
epidemic. In spite of everyone's best efforts, there was a drop of 31.95 % of dirty banknotes that
were discarded over the entire year as compared to the previous year.

[28]
There was a rise in the dumping of dirty banknotes from 997.02 crore pieces in the previous year
to 1,878.01 crore pieces for the 2021-22 fiscal year; this is an increase of 88.4% as compared from
the previous year.

Financial Year Disposal of Soiled banknote (pieces in lakh)

Upto 5 10 20 50 100 200 500 1000 2000 Total
2010-11 1660 36570 6640 11140 40850 43470 7060 147390
2011-12 1010 35840 5620 15780 55770 19940 3750 137710
2012-13 720 37520 6090 13570 56270 22630 4500 141300
2013-14 480 41280 7250 13980 49720 24050 5110 141870
2014-15 440 43380 8010 12710 51730 28470 6630 151370
2015-16 460 55300 8490 13490 51690 28000 6250 163680
2016-17 340 35400 5460 7780 25860 35060 15140 125040
2017-18 80 4970 1140 830 1050 200240 68470 276780
2018-19 591 65239 11626 8352 37945 1 154 22 6 123936
2019-20 1244 55744 21948 19070 44793 318 1645 0 1768 146530
2020-21 564 21999 10325 12738 42433 1186 5909 0 4548 99702
2021-22 1257 46778 20771 27696 59203 6167 22082 3847 187801
Source: RBI Annual Report
Table 4: Disposal of Soiled Banknote

NUMBER OF COUNTERFEIT NOTES DETECTED IN INDIA

During the fiscal years 2021-22, the Reserve Bank of India has detected 6.9% of the total number
of fake Indian currency notes (FICNs) which is 3% more than last year notes detected at RBI,
while other banks has also detected 93.1% of fake Indian currency notes.

Financial Year No. of counterfeit notes detected (No. of pieces)

Detection at RBI Other Banks Total
2010-11 45235 390372 435607
2011-12 37690 483465 521155
2012-13 29200 469052 498252
2013-14 19827 468446 488273
2014-15 26128 568318 594446
2015-16 31765 601161 632926
2016-17 32432 729640 762072
2017-18 188693 334090 522783
2018-19 17781 299603 317384
2019-20 13530 283165 296695

[29]
 2020-21 8107 200518 208625
2021-22 15878 215093 230971
Source: RBI
Table 5: Number of counterfeit notes detected

According to RBI, the counterfeit notes detected in Denomination wise, there was an increase of
16.4% in denomination of 10, 16.5% increase in denomination of 20, 11.7% increase in
denomination of 200, 101.9% increase in denomination of 500 (new design), and 54.6% increase
in denomination of 2000 in comparison to the previous year. There was a decrease of 28.7% in the
number of Counterfeit note of denomination 50 and 16.7% decrease in the denomination of 100.
There is an overall increase of 10.7% increase in detection of counterfeit note denomination wise.

Financial
Year Denomination wise detection of counterfeit notes (No. of pieces)
2 500 500
& (MG (New
5 10 20 50 100 200 Series) design) 1000 2000 Total
2011-12 126 216 12457 123398 301678 83280 521155
2012-13 2 321 221 9759 108225 281265 98459 498252
2013-14 1 157 87 6851 118873 252269 110035 488273
2014-15 0 268 106 7160 181799 273923 0 131190 0 594446
2015-16 2 134 96 6453 221447 261695 0 143099 0 632926
2016-17 80 523 324 9222 177195 317567 199 256324 638 762072
2017-18 1 287 437 23477 239182 79 127918 9892 103611 17929 522813
2018-19 345 818 36875 221218 12728 971 21865 717 21847 317384
2019-20 22 844 510 47454 168739 31969 11 30054 72 17020 296695
2020-21 9 304 267 24802 110736 24245 9 39453 2 8798 208625
2021-22 1 354 311 17696 92237 27074 14 79669 11 13604 230971
Source: RBI, Patna
Table 6: Denomination wise detection of counterfeit notes (No. of pieces)

[30]
ANALYSIS ON CLEAN NOTE POLICY IN BIHAR AND JHARKHAND

ANALYSIS OF PAID NOTES IN BIHAR AND Jharkhand

As indicated in table 7, the RBI ejected 60 lakh pieces of Paid notes in Quarter 1 of 2022, a 2.77%
increase over Q4 of 2021. We can see favorable trends in the ejection of paid notes from Q3 of
2019 to Q4 of 2020 in Figure 6, yet there is a progressive drop in the ejection of Paid notes owing
to covid. There has been a significant rise in the withdrawal of paid notes from Q1 of 2021 to Q1
of 2022, indicating that paid notes withdrawal at good pace. Figure 7 also shows that there has
been a significant increase in the removal of low denomination paid notes, which are more in
circulation and have a higher risk of being unsuitable for circulation.

Denomination
Quarterly (year) 1 2 5 10 20 50 100 200 500 2000
0 0 0 1919 228 1057 1134 0 26 0
Q3(2019) 0 0 0 2019 428 1157 1334 0 26 0
0 0 0 3819 528 19157 2234 0 26 0
0 0 0 6030 12652 19489 2361 63 329 42
Q4(2019) 0 0 0 6030 652 19589 3151 94 572 144
0 0 0 6230 852 19589 2874 94 372 144
0 0 0 6752 1059 23280 12091 1301 11989 1371
Q1(2020) 0 0 0 14212 2930 29511 31679 1556 18800 5488
0 0 0 20588 5446 34318 187881 5844 40232 9564
0 0 0 35634 8484 46688 246304 7011 51086 12576
Q2(2020) 0 0 100 85527 32719 123982 389155 8228 69267 15011
0 0 3200 174326 83258 130700 455997 9583 86115 19583
0 0 7700 349924 121932 153010 518391 11918 99029 23925
Q3(2020) 20 40 7920 395800 120506 164957 510661 10296 93501 24473
26 44 11196 385303 104661 119995 531613 11109 100463 26117
26 44 12098 434238 111250 128480 576405 11354 120187 29383
Q4(2020) 26 44 12655 462798 112226 130914 585948 11397 121078 29553
26 44 25705 533405 130884 149915 600870 21400 308927 30085
1726 2644 17405 445328 105603 121853 422057 28321 320545 35812
Q1(2021) 226 144 6195 187521 48804 99969 323209 20472 274037 23239
226 144 6476 274603 58428 111021 346778 20161 270388 21631
226 144 7579 310350 62982 117568 382718 21959 278937 23223
Q2(2021) 226 154 8967 357296 71546 138019 441027 24083 291407 24449
226 154 8967 361102 71415 138940 446086 24471 293920 25203
Q3(2021) 226 154 9029 364281 72284 152770 469004 51097 296847 25575

[31]
 226 154 9029 396129 73373 154778 477417 51392 300357 25888
206 114 6367 371284 70528 165959 477980 26442 302179 26426
206 114 6383 406226 72457 173569 498779 27106 306058 26976
Q4(2021) 206 114 6383 431114 74827 175898 501633 27044 306964 27873
206 114 6383 540785 78220 179073 522592 27920 310500 28395
206 114 6386 580784 88278 191106 552485 49107 322570 30137
Q1(2022) 206 114 8402 700011 109953 200108 614344 53442 334781 30915
206 114 8402 793233 136372 201054 649556 54578 339954 30558
Source: RBI, Patna
Table 7: Analysis of paid notes in Bihar and Jharkhand

Paid Notes Analysis

7000000.00
Volume (pieces in lakhs)

6000000.00

5000000.00

4000000.00

3000000.00

2000000.00

1000000.00

0.00

Quarterly (Year)

Figure 6: Paid Note Analysis

[32]
 Paid Notes Analysis ( Denomiation wise)
3500000
3000000
2500000
Volume (pieces in lakhs)

2000000
1500000
1000000
500000
0

Quarterly (Year)

Total HDN Total LDN

Figure:7 Paid Note Analysis (Denomination wise)

ANALYSIS OF FRESH NOTES IN BIHAR AND Jharkhand

As indicated in table 8, the RBI injected 1756 lakh pieces of new notes in Quarter 1 of 2022, a
5.16% increase over Q4 of 2021. We can see favorable trends in the infusion of fresh notes from
Q3 of 2019 to Q1 of 2020 in Figure 8, yet there is a progressive drop in the injection of fresh notes
owing to covid because there was little demand. There has been a significant rise in the circulation
of fresh notes from Q4 of 2020 to Q3 of 2021, indicating that new notes are available in the market.

Low Denomination Fresh Note

Quarterly (year) 1 2 5 10 20 50
0 0 0 14532300 0 20514200
Q3(2019) 0 0 0 13904300 3687000 44137216
0 0 0 13309900 11743104 43759130
0 0 0 14256695 54373497 35195603
Q4(2019) 0 0 0 16325568 47770380 29692425
784000 0 0 15769875 38396180 34589697
2529100 0 0 17145245 30162679 28712135
Q1(2020) 3218750 0 0 13111045 24977426 23852256
3437750 0 0 11413674 21691276 20461289

[33]
 3589250 0 0 10613674 20546076 17786529
Q2(2020) 2818750 0 0 9009274 16225626 16592755
2128930 0 0 8192274 15206226 15962798
1841900 0 0 7497674 14612361 15556259
Q3(2020) 1551900 0 0 6936374 13726159 15337992
1320500 0 0 6141166 12723859 15165792
1062100 0 0 4980686 11099657 14630278
Q4(2020) 792700 0 0 9408216 15093857 17788478
933700 0 0 9152616 19957557 23971078
756300 0 0 6410409 45320986 27657878
Q1(2021) 712800 0 0 6857009 89919586 40746986
862800 0 0 10338809 125674186 48528486
682800 0 0 9380150 124816300 59384386
Q2(2021) 475500 0 0 7823750 98231936 37780389
695500 0 0 9058850 103211536 38560589
665500 0 0 9078950 113249836 40200889
Q3(2021) 607500 0 0 8329950 110928736 41375230
565000 0 0 7597850 111736336 43834151
504000 0 980000 7405750 109645756 47143611
Q4(2021) 403000 0 1160000 6670750 97706411 44137063
350000 0 1380000 7346950 98005166 50301207
301700 0 1360000 11831450 110030815 59822947
Q1(2022) 1531200 1250000 3555000 23756450 119066769 65362307
2279700 2090000 4775000 21280250 117892035 63332430
Source: RBI, Patna
Table:8 Analysis of fresh notes in Bihar and Jharkhand (LDN)

High Denomination Fresh Note

Quarterly (year) 100 200 500 2000
16954400 8834269 39684761 0
Q3(2019) 48871673 7622370 65623687 0
100005840 16959190 107852953 0
90798818 24786514 75505495 0
Q4(2019) 88681991 28067119 75342766 0
96121680 30630138 116119593 0
86148001 27546252 196676250 0
Q1(2020) 70937654 24646440 245597900 0
58473548 24300071 254939793 0
48487703 19885416 226599054 0
Q2(2020)
38515270 16958453 188912098 0

[34]
 33924780 15342311 243696420 0
32096632 14683831 243089532 0
Q3(2020) 30716610 14381051 189910850 0
30652185 15735425 198403584 0
26415612 13785276 191229450 0
Q4(2020) 29948670 14440395 202134694 0
36312800 21016702 210173918 0
49321423 22700972 230216870 0
Q1(2021) 101984852 33167389 241364673 0
134626979 49521205 250427818 0
161390976 53243663 196981509 0
Q2(2021) 166662348 37127882 193423810 0
169836264 39335882 204417188 0
180518764 42787167 254528421 0
Q3(2021) 182567695 40094664 243223980 0
179256746 35656702 223140386 0
146859565 41252676 206131210 0
Q4(2021) 125106543 85141762 181817811 0
154743219 76327827 179683323 0
151415005 62250084 165892091 0
Q1(2022) 145893425 49736040 180522743 0
129375122 42820420 219042175 0
Source: RBI, Patna
Table:9 Analysis of fresh notes in Bihar and Jharkhand (HDN)

Fresh Note Analysis

20000
Volume (pieces in lakhs)

18000
16000
14000
12000
10000
8000
6000
4000
2000
0

Quarterly (Year)

Figure:8 Fresh Note Analysis

[35]
 Fresh Notes Analysis ( Denomiation wise)
Volume (pieces in lakhs) 16000
14000
12000
10000
8000
6000
4000
2000
0

Quarterly (Year)

Total HDN Total LDN

Figure:9 Fresh Note Analysis (Denomination wise)

ANALYSIS OF SOILED NOTES IN BIHAR AND Jharkhand

According to the figure 10 of soiled note analysis, we can see the gradual increases in the number
of pieces of soiled notes in the currency chest which shows that soiled notes are taken out from the
circulation for the further processing. Post demonetization there is huge increase in the soiled note
in currency chest at various branches. Currently there 11043 lakh pieces of soiled notes in currency
chest in 2021.

Low Denomination Soiled Note

As on Date 1 2 5 10 20 50
Jan-15 70496 175182 3949614 137837436 20825952 30965405
Feb-15 71951 163327 3502293 133809360 16953658 27663051
Mar-15 71551 159527 3282093 131145760 16513358 25551213
Apr-15 74151 163727 3103893 117517072 14379041 21533945
May-15 75151 167227 3369593 112877950 12359002 18488346
Jun-15 26151 177627 3107193 112182250 12476192 16898440
Jul-15 79151 180627 3066593 115270350 12763692 19115900
Aug-15 81951 185227 2743173 117889750 14322192 17858320
Sep-15 82151 187127 2789473 122318550 13243027 18159260
Oct-15 80351 187027 3051873 141309650 15128340 21110858
Nov-15 88451 191227 163050850 163050850 17284527 24303860

[36]
Dec-15 90751 196327 3493073 157850950 17101327 24707904
Jan-16 152651 201527 3903973 170973750 18094027 26995004
Feb-16 93651 199627 4082473 202829260 21247065 30904446
Mar-16 48651 166627 3882953 166092716 17084426 22225719
Apr-16 53651 168627 3980353 158512077 17430593 22254877
May-16 53151 173527 3687153 167120403 17979275 21947031
Jun-16 54151 177527 4085253 202949503 21211575 25845075
Jul-16 58151 206527 4008078 189996606 20686982 24266101
Aug-16 58351 194427 4009078 176287906 18836582 24473701
Sep-16 56951 189427 4097924 197917770 21490441 28393521
Oct-16 57951 194927 4469684 226230870 25214441 31535651
Nov-16 57951 194927 4469684 226230870 25214441 31535651
Dec-16 57951 194927 4469684 226230870 25214441 31535651
Jan-17 59567 223149 6043963 104175746 12158869 9212650
Feb-17 60967 223349 6783363 128798955 13730688 10560557
Mar-17 60979 227858 7670047 162588921 18546588 15035757
Apr-17 61379 232858 8302847 175115121 21667688 18251647
May-17 62179 239958 8937347 202722331 26365588 22390547
Jun-17 63779 244158 9661147 238418031 33838788 28528365
Jul-17 63779 245858 10520547 283022231 43591663 35680715
Aug-17 69479 266558 11221347 311916435 54004663 43480801
Sep-17 43079 158458 4748865 62033962 11867430 10059645
Oct-17 78879 275858 12624945 409259811 79196063 60251423
Nov-17 92979 282058 13474145 442122651 99567063 74883223
Dec-17 93979 247058 14273645 474541366 113726763 81815918
Jan-18 97379 252358 14999145 487485266 125040563 87267218
Feb-18 97367 252349 15464761 505769866 133001663 90117218
Mar-18 94467 252349 15973961 520864166 141742163 95796631
Apr-18 92467 239049 14935350 371875107 113414141 63668434
May-18 106967 254849 16935485 459533496 140436436 87255853
Jun-18 102967 254849 17388813 450924796 149125136 95052250
Jul-18 99467 256849 18230213 451815596 157008336 106140150
Aug-18 117567 262049 18957855 460082395 160615636 114086227
Sep-18 99467 261849 19363955 463085662 157062136 124412750
Oct-18 96467 264349 19953655 474904561 158463872 130888213
Nov-18 96467 264849 20456355 473840461 159068272 135687613
Dec-18 98467 271249 21193655 458414698 162741366 142548813
Jan-19 98467 310249 21753955 437880250 164629950 147742813
Feb-19 98667 314749 21523571 385587979 165570750 151551813
Mar-19 63751 200327 10432962 122595049 36759005 30335550
Apr-19 96067 314449 20973215 339163709 162236307 149809460
May-19 78667 251649 20905653 366992945 179855307 161719447
Jun-19 78667 249649 20993645 374488945 188442107 169058047
Jul-19 53400 145700 13253864 260579858 149053309 137162970

[37]
 Aug-19 54200 147300 13276264 261722914 150298658 139607960
Sep-19 57800 162700 13361164 279473914 172300454 151217560
Oct-19 61200 163400 12576970 295049436 177797661 154377164
Nov-19 40000 93600 10044499 288579670 183811961 153448864
Dec-19 37000 99800 10354199 274883370 192036361 156346964
Jan-20 41700 116400 11270720 268515033 188622838 156996854
Feb-20 46216 141122 12008745 279610333 186034539 157297678
Mar-20 45916 142722 12246745 286709489 184319402 159349688
Apr-20 45916 149722 13337045 307152069 191900958 164050821
May-20 49116 150322 14152345 323067699 198634667 170740702
Jun-20 46716 134422 14556813 345402769 206752211 182321574
Jul-20 46916 135122 14981913 371653569 215801169 186388624
Aug-20 47016 135322 15233513 398341369 216638769 186064224
Sep-20 48022 141322 15670620 401985525 212809890 185220940
Oct-20 48022 148322 15954920 409192499 212003204 180975649
Nov-20 48022 148322 15615720 404052299 212915604 182386518
Dec-20 45022 148322 16488420 417426440 214218884 184680232
Jan-21 36322 111722 14162850 393289103 209717155 184084469
Feb-21 24222 74022 12903050 368601369 203716305 176692889
Mar-21 23722 72722 13025282 371135916 201290105 172669371
Apr-21 27222 75522 13380882 364567316 179897882 169213671
May-21 27222 75622 13214282 326480496 171687827 172562489
Jun-21 27222 75622 13444282 317377396 164854727 172422406
Jul-21 27222 75622 13511922 317459791 163523187 172202975
Aug-21 27222 80622 14025922 312879118 156499968 173530122
Sep-21 27222 78422 12616822 282101222 131120869 159037854
Oct-21 26522 75522 12542146 257907221 103020610 123576928
Nov-21 28522 79522 12029046 234983728 76942608 104710943
Dec-21 28922 79122 12486472 210744401 68372380 98541583
Source: RBI, Patna
Table:10 Analysis of Soiled notes in Bihar and Jharkhand (LDN)

High Denomination Soiled Note

As on Date
100 200 500 1000 2000
Jan-15 81221750 0 38399037 6316279 0
Feb-15 65080103 0 30423463 5646154 0
Mar-15 63497940 0 29021274 5116919 0
Apr-15 45585892 0 24150955 4040431 0
May-15 56406555 0 27112140 4323940 0
Jun-15 58103419 0 27476296 4507564 0
Jul-15 55104829 0 28924210 4660980 0
Aug-15 50746294 0 30316927 4839414 0

[38]
Sep-15 60563426 0 29862124 4653724 0
Oct-15 69811023 0 36470879 6040355 0
Nov-15 78468926 0 43407695 7323066 0
Dec-15 84760526 0 39179471 6066615 0
Jan-16 95767009 0 42417729 9075288 0
Feb-16 98340317 0 46642203 9937477 0
Mar-16 89779280 0 36766380 7579354 0
Apr-16 87620591 0 39232039 6856105 0
May-16 73407931 0 32312321 6096451 0
Jun-16 88237402 0 42184010 7674350 0
Jul-16 82132527 0 42636144 9600969 0
Aug-16 79444777 0 46125089 8546289 0
Sep-16 95646800 0 50471285 9812595 0
Oct-16 116305213 0 54316807 10464998 0
Nov-16 116305213 0 54316807 10464998 0
Dec-16 116305213 0 54316807 10464998 0
Jan-17 12815544 0 932762503 291152859 167
Feb-17 16311774 0 929110645 290561410 609
Mar-17 21954759 0 878006222 274937347 1321
Apr-17 27072167 0 783298761 236090112 1421
May-17 34368717 0 726605711 199048130 2821
Jun-17 46184347 0 643755637 168407253 13521
Jul-17 60998112 0 471043776 129196038 18721
Aug-17 79335149 0 350593069 90226529 22421
Sep-17 24088999 0 158532187 44463577 21521
Oct-17 124987362 0 132457917 34788778 44012
Nov-17 155326062 0 8463570 3194982 37649
Dec-17 172033557 0 2554101 1233027 66949
Jan-18 172476752 0 187688 300 100610
Feb-18 186098932 100 200891 300 84110
Mar-18 174041207 3100 300 0 57228
Apr-18 102868121 0 17125 0 56319
May-18 107471789 7000 29099 0 74796
Jun-18 131000552 7100 122199 0 77893
Jul-18 139605676 26600 221499 0 90097
Aug-18 139186897 25100 259299 0 94397
Sep-18 156295146 174500 3405899 0 661197
Oct-18 152026667 210500 4231399 0 804320
Nov-18 146167867 210700 4337699 0 809142
Dec-18 150935104 346200 5265900 0 835885
Jan-19 154960014 458400 8152000 0 946085
Feb-19 175395714 448600 5846428 0 963740
Mar-19 46901410 65500 441022 0 130418
Apr-19 204899819 445600 4741897 0 329898
May-19 225351914 479908 4568707 0 339045
Jun-19 239611031 260608 3410522 0 345926

[39]
 Jul-19 230269341 308100 2520688 0 339762
Aug-19 231702344 375600 3173697 0 405262
Sep-19 234940444 413100 3664081 0 439487
Oct-19 208893610 944300 5847108 0 674872
Nov-19 179715883 1072700 5359962 0 681406
Dec-19 142531638 2498100 7638704 0 1260046
Jan-20 140345683 3271612 9828811 0 1439995
Feb-20 150072807 4348083 12790336 0 1581565
Mar-20 157509851 3422329 12157653 0 1493286
Apr-20 169866571 4195845 15295584 0 1690289
May-20 187789070 5479288 17760257 0 1845708
Jun-20 214171304 10095860 24088731 0 2323038
Jul-20 227787210 13229190 30641518 0 2791454
Aug-20 234298950 15671790 35750560 0 3070404
Sep-20 213485198 18533451 36787301 0 3176992
Oct-20 213353929 20904337 40498610 0 3087297
Nov-20 217576550 21855437 41237041 0 2971412
Dec-20 223556783 24951642 49398880 0 3540091
Jan-21 207937288 23672915 46983010 0 3599203
Feb-21 195052629 24500962 41061508 0 2352769
Mar-21 177917972 18380044 29568446 0 2003471
Apr-21 180558417 21315672 33847914 0 2452394
May-21 210604557 28678959 63315675 0 3492598
Jun-21 213004374 30159701 60512045 0 3658785
Jul-21 213782666 31473259 65770832 0 3825190
Aug-21 218901997 33255132 65555728 0 2246531
Sep-21 205891549 37178486 61072081 0 2310769
Oct-21 196937420 38406625 47812819 0 2411693
Nov-21 205432975 38025693 47770598 0 2855620
Dec-21 186705283 36655350 45664412 0 2547511
Source: RBI, Patna
Table:11 Analysis of Soiled notes in Bihar and Jharkhand (HDN)

[40]
 Soiled Note Analysis
140000

Volume (pieces in lakhs)

120000
100000
80000
60000
40000
20000
0
2015 2016 2017 2018 2019 2020 2021
Year

Figure:10 Soiled Note Analysis

Soiled Notes Analysis ( Denomiation wise)

100000
Volume (pieces in lakhs)

90000
80000
70000
60000
50000
40000
30000
20000
10000
0
2015 2016 2017 2018 2019 2020 2021
Axis Title

Total LDN Total HDN

Figure:11 Soiled Note Analysis (Denomination wise)

ANALYSIS OF RE-ISSUABLE NOTE IN BIHAR AND JHARKHAND

According to the figure 12 of Re-issuable note analysis, we can see the gradual increases in the
number of pieces of re-issuable notes in the currency chest from 2017 to 2019 and there is a gradual
decrease in these notes from 2019 to 2021 which shows that most of soiled and mutilated notes

[41]
are gone through CVPS and SBS. Figure 13 shows that’s lesser number of LDN notes are re-issued
as compared to the HDN, which are mostly in circulation.

Low Denomination Re-Issuable Note

As on Date 1 2 5 10 20 50
Jan-17 815600 11900 1756039 162331302 46727083 33830490
Feb-17 745600 11900 1805739 164503056 55259745 27156152
Mar-17 659100 12400 1807101 173734770 68627482 38336694
Apr-17 615100 13200 1817201 169427586 66078269 48704070
May-17 563600 16700 1962605 168516059 61297309 46262385
Jun-17 526600 17100 2045205 189631814 59428124 40751286
Jul-17 480600 17100 2173205 229358078 64804462 45857594
Aug-17 453600 18100 2226555 261660174 95564334 58744499
Sep-17 9500 10500 1305559 103815465 53196515 27940963
Oct-17 423600 17100 2412465 252474081 102264196 71789346
Nov-17 287600 17100 2550865 258216238 95614965 81238157
Dec-17 264600 54100 2552865 259907821 92593001 80122088
Jan-18 231200 51800 2595627 304138296 88530883 69106448
Feb-18 1568200 52000 2675635 400026001 81825821 57358292
Mar-18 2065600 52225 2700085 309815367 83734748 72730139
Apr-18 1835600 52000 2353901 254095382 44486768 55909161
May-18 1727200 50500 2652499 263479576 52815118 60407197
Jun-18 1595600 50500 2870057 271863759 55541438 69630515
Jul-18 1519800 51200 3125849 365781978 64826238 183279730
Aug-18 1165700 51100 3233725 384001804 70968836 197269155
Sep-18 981200 50000 3391285 397662520 75322617 232560049
Oct-18 676100 48700 3392873 380969929 77099985 193570606
Nov-18 423200 48700 3545199 377657139 80343446 174059447
Dec-18 369200 48100 3568317 369419379 82671349 166722363
Jan-19 278200 9100 3530097 346000562 83765610 152421826
Feb-19 265700 8900 3553077 329937361 82784062 141834254
Mar-19 87900 4700 2044987 221922953 55067482 90544961
Apr-19 226600 8700 3537611 298725193 79530182 153223993
May-19 198200 9400 3543039 306486856 78556806 180466918
Jun-19 198100 9450 3542839 306386856 78556806 180456918
Jul-19 219614417 131017474 87286052 454736747 114655829 197531459
Aug-19 207033017 122848774 80730048 404797875 106162983 174717258
Sep-19 222582117 133216674 86371738 437013360 98473630 180051711
Oct-19 224196517 136140574 87576580 415594894 93247556 167595100
Nov-19 213402217 129016474 82535079 351297241 82956160 149219865
Dec-19 225136517 137407674 86636175 379947682 85665760 163162007
Jan-20 227030817 139838974 85615220 368749145 84672124 160517779

[42]
 Feb-20 229225730 140958225 84944604 353562131 82021364 150516542
Mar-20 230690730 142177725 85055360 337390220 81047859 148027057
Apr-20 232085830 143599425 85828886 316830867 77530285 136485981
May-20 232482930 145198525 85316336 296687793 73415469 125513671
Jun-20 227779250 144682025 83620090 284038417 67517523 112509668
Jul-20 224390150 141038025 83401700 267957447 62638497 112796313
Aug-20 225254050 141746525 83059760 250136411 61598710 113171677
Sep-20 225744887 142080164 83444096 240592748 59765340 113871139
Oct-20 226700085 143486625 83640084 238130906 58451368 109639261
Nov-20 194335085 142743925 73564899 153217434 53591215 104007547
Dec-20 195733885 143248425 75253557 185692304 53610686 101224984
Jan-21 221014555 145235500 49163709 114270944 52274466 101947290
Feb-21 218367815 143972735 43306903 88039040 54955407 101373256
Mar-21 214518565 155533185 40391532 63956137 55543143 103545506
Apr-21 220069920 159262935 44662147 89705164 57244428 104937140
May-21 224606721 158620147 44282888 82422258 60523955 106089907
Jun-21 222437421 158663997 47407641 82232485 61748710 108843034
Jul-21 235777721 158042897 45151738 104845108 59257664 110181734
Aug-21 236743321 158445297 48946142 139045092 61284973 112042717
Sep-21 231763522 159379549 53467529 132769755 63005397 114890650
Oct-21 221196722 164525549 51340836 107759659 64423433 114239374
Nov-21 225082272 164597234 45987856 78954499 64669297 107564360
Dec-21 229976353 163852306 47179419 80176537 64318434 103034053
Source: RBI, Patna
Table:12 Analysis of Re-Issuable notes in Bihar and Jharkhand (LDN)

High Denomination Re-Issuable Note

As on Date 100 200 500 1000 2000
Jan-17 68344658 0 16903923 0 34709236
Feb-17 60498707 0 12945346 0 13184951
Mar-17 67229177 0 36048049 0 10879440
Apr-17 74154222 0 23518041 0 5459242
May-17 78926858 0 35706134 0 4082701
Jun-17 94449757 0 76555070 0 4689651
Jul-17 158517745 0 118258825 0 7979121
Aug-17 210720128 0 114609840 0 13766133
Sep-17 82280180 1252960 58046544 0 2487986
Oct-17 241362823 1316669 90649737 0 12297322
Nov-17 268342139 23224314 73257725 0 12172999
Dec-17 247516835 80968711 62370201 0 12383137
Jan-18 203755897 75692679 69117305 0 10237929
Feb-18 189728969 34813038 47991004 0 7139509
Mar-18 154314199 15958308 39519019 0 6623013
Apr-18 81377685 4381636 29013379 0 2097205

[43]
May-18 127440502 7791037 76026914 0 4356256
Jun-18 143471805 8634613 162188708 0 4846529
Jul-18 197334961 13021693 215037769 0 7869605
Aug-18 230753451 15108460 226575939 0 9296464
Sep-18 254886150 17009389 251510457 0 9646003
Oct-18 292307258 23809100 239987582 0 8905143
Nov-18 335860788 58981032 269677835 0 9249082
Dec-18 356769545 89726259 259489860 0 10627351
Jan-19 335731306 114140887 224866485 0 10921900
Feb-19 352845790 91709709 186961848 0 9109213
Mar-19 279743962 53331397 73129457 0 2312935
Apr-19 380777826 57926792 144440771 0 6567226
May-19 369400871 68970687 139688503 0 6597838
Jun-19 370400871 69070687 140688503 0 6397838
Jul-19 354938946 58156861 143887220 0 6256087
Aug-19 325926598 50888867 150932925 0 6088360
Sep-19 309087904 51053857 162525907 0 6485827
Oct-19 275247564 45325252 145470048 0 5783183
Nov-19 259948014 45161180 160294198 0 6750106
Dec-19 269844664 47243486 160241664 0 9475278
Jan-20 258497595 48554667 177315307 0 9735319
Feb-20 239361584 42942972 165633841 0 8437366
Mar-20 222233981 38859486 145778901 0 8162223
Apr-20 192898053 29695234 114774690 0 7841442
May-20 177991523 28723704 100480875 0 7434749
Jun-20 173737024 29945085 137814367 0 8382115
Jul-20 179929241 33832962 177377217 0 9671352
Aug-20 182316106 36210416 207766933 0 10838455
Sep-20 184256739 38682092 239806220 0 11769607
Oct-20 181066580 38505311 242571876 0 12056482
Nov-20 170902551 36281550 226407293 0 11725057
Dec-20 166536649 35381642 234530694 0 11873795
Jan-21 161199117 34263060 240119768 0 11498633
Feb-21 155109553 32063886 237373615 0 11679905
Mar-21 149662984 32315116 240415018 0 11961058
Apr-21 150249645 31225707 237272445 0 11925534
May-21 150347233 35245306 260960187 0 12070641
Jun-21 154646900 37319212 280343545 0 12257173
Jul-21 156739549 38240668 289457356 0 12447232
Aug-21 161704908 39948286 305067832 0 12774126
Sep-21 161368057 42929421 326365107 0 12957724
Oct-21 159028107 39364375 336656439 0 12858817
Nov-21 157941415 36479866 332915203 0 12672108
Dec-21 152998389 34695255 346171522 0 12714002
Source: RBI, Patna
Table:13 Analysis of Re-Issuable notes in Bihar and Jharkhand (HDN)

[44]
 Reissuable Note Analysis
180000 164100.4873 160276.5341

Volume (pieces in lakhs)

160000 142111.1059
140000
114305.1027
120000
100000
80000 64983.10594
60000
40000
20000
0
2017 2018 2019 2020 2021
Year

Figure:12 Re-Issuable Note Analysis

Reissuable Note Analysis ( Denomiation wise)

120000
Volume (pieces in lakhs)

100000
80000
60000
40000
20000
0
2017 2018 2019 2020 2021
Year

Total LDN Total HDN

Figure:13 Re-Issuable Note Analysis (Denomination wise)

[45]
TRENDS IN CURRENCY

BANKNOTES IN CIRCULATION IN INDIA

The value of banknotes in circulation climbed by 9.9 % during 2021-22, while the volume of
banknotes in circulation increased by 5.0 percent. This is in comparison to a growth of 16.8 % in
value and 7.2 % in volume during 2020-21. As of the 31st of March in 2022, the value of
banknotes with denominations of 500 and 2000 combined accounted for 87.1 % of the total value
of all banknotes in circulation, which is an increase from the previous figure of 85.7 % as of the
31st of March in 2021. The banknotes with a denomination of 500 comprised the biggest
percentage in terms of volume, at 34.9 %, followed by those with a denomination of 10, which
formed 21.3 % of all the banknotes that were in circulation as of March 31, 2022.

Banknotes Circulation
Financial Year Circulation in Value (Rs Cr) Circulation in Volume (pieces In Lakh)

2011-12 1066100 693840

2012-13 1180100 735170
2013-14 1300200 773300
2014-15 1448300 835790
2015-16 1663300 902660
2016-17 1335200 1002930
2017-18 1829300 1023950
2018-19 2110892 1087594
2019-20 2420975 1159768
2020-21 2826863 1243671
2021-22 3105721 1305326
Source: RBI
Table 14: Banknotes Circulation (in India)

[46]
 Banknotes in Circulation (Rs Cr)
3500000
3000000
Value ( Rs Core) 2500000
2000000
1500000
1000000
500000
0

Financial Year

Figure 14: Banknotes Circulation in India (in values)

Banknotes Circulation ( in pieces)

1400000
Volume ( pieces in lakh)

1200000
1000000
800000
600000
400000
200000
0

Financial Year

Figure 15: Banknotes Circulation in India (in pieces)

[47]
COINS IN CIRCULATION IN INDIA

Throughout the course of the year, there was a rise in demand for coins now in circulation. The
total value of coins in circulation increased by 4.09 % in 2021-22 as against 2.14 % last year, while
the total volume of coins in circulation increased by 1.3 % as compared with .98 % in the previous
year.

Coins in Circulation
Financial Year Circulation in Value (Rs Cr) Circulation in Volume (pieces In Lakh)

2011-12 13300 780290

2012-13 15300 847270
2013-14 17300 916290
2014-15 19400 989640
2015-16 21800 1070880
2016-17 25000 1161820
2017-18 25600 1189780
2018-19 25844 1203240
2019-20 26305 1218038
2020-21 26870 1229988
2021-22 27970 1246298
Source: RBI
Table 15: Coins in Circulation (in India)

Coins in Circulation ( Rs. Cr.)

30000
25000
Value ( Rs. Cr.

20000
15000
10000
5000
0

Financial Year

[48]
 Figure 16: Coins in Circulation in India (in values)

Coins in Circulation Volume(in pieces)

1400000
Volume ( pieces in lakh)

1200000
1000000
800000
600000
400000
200000
0

Financial Year

Figure 17: Coins in Circulation in India (in pieces)

DEMAND ESTIMATION AND SUPPLY OF CURRENCY

INDENT AND SUPPLY OF BANKNOTES

The Reserve Bank estimates the demand for currency using an econometric model which includes
factors like expected real GDP growth, rate of inflation and denomination-wise disposal rate of
soiled notes. The total number of banknotes supplied was lower at 222506 million pieces in 2021-
22 as compared with 223301 million pieces in 2020-21. The supply of banknotes was marginally
lower by 0.4 percent during 2021-22 than the previous year while the indent of banknotes for 2021-
22 was also marginally lower by 1.8 per cent than that of a year ago, which is shown in the below
table.

Indent and Supply of Banknotes by BRBNMPL and SPMCIL (April-March)

(Million pieces)
Denomination 2018-19 2019-20 2020-21 2021-22
Indent Supply Indent Supply Indent Supply Indent Supply

[49]
 5 - - - 60 - -
10 39200 42892 14700 14702 2840 2846 7500 7510
20 460 2096 12500 13390 48750 38520 20000 20000
50 42330 40401 24000 23431 14000 13887 15000 15000
100 63300 64075 33000 32708 40000 37270 40000 40002
200 26150 27301 20500 19588 15000 15106 12000 11991
500 116920 114679 146300 119996 106000 115672 128000 128003
2000 4470 467 - - - -
Total 288830 291911 251000 223875 226590 223301 222500 222506
Source: RBI
Table 16: Indent and Supply of Banknotes by BRBNMPL and SPMCIL

INDENT AND SUPPLY OF COINS

Due to an accumulation of stock and a decrease in demand during the last several years, the demand
for coins in 2021-22 was about 73.3 percent lower than it was the previous year, and the supply of
coins was approximately 73.1 percent lower than it was the previous year, as shown in the below
table.

Indent and Supply of Coins by BRBNMPL and SPMCIL (April-March)

Denomination 2018-19 2019-20 2020-21 2021-22
Indent Supply Indent Supply Indent Supply Indent Supply
1 20000 25550 1000 1093 1000 1000 2000 2000
2 10000 12860 8000 7993 9500 6718 2000 2000
5 11320 6779 10000 9984 11000 10995 2000 2000
10 20000 16132 12000 11565 5500 5852 2000 2000
20 - - 3000 458 3000 5061 2000 2000
Total 61320 61321 34000 31093 30000 29626 8000 8000
Source: RBI
Table 17: Indent and Supply of Coins by BRBNMPL and SPMCIL

[50]
ANALYSIS OF BANKNOTE CIRCULATION IN BIHAR AND JHARKHAND

Currency management in the states of Bihar and Jharkhand is the responsibility of the Regional
Office of the Reserve Bank of India in Patna, which is located in Bihar's capital city. The Issue
Department first came into being in 1968, and it now has a tight working relationship with the
Department of Currency Management (DCM), which is based in Mumbai. There is 190 Currency
Chests that are under the authority of the Issue Circle that covers Bihar and Jharkhand. The State
Bank of India controls the largest proportion of the automated teller machines and currency chests
located throughout the state of Bihar. According to Issue department of RBI, Patna, year on year
growth of currency circulation increases despite the covid situation.

Financial Banknote Circulation (pieces in

Year Lakh)
Total Denomination
2018-19 238437.92
2019-20 259093.93
2020-21 287425.28
2021-22 315669.20
Source: RBI

Table 18: Banknote circulation in Bihar and Jharkhand

According to the Issue department of RBI Patna, we have seen that the currency circulation in
Bihar and Jharkhand has been shown a positive trend from the past 4 years. The volume of
banknotes in circulation climbed by 8.9 % during 2021-22, followed by the growth of 10.93%
during 2020-21, 8.66% growth in financial year 2019-20.

[51]
 Banknote Circulation in Bihar and Jharkhand
350000.00
315669.20
300000.00 287425.28
259093.93
Volume (pieces in lakh)

250000.00 238437.92

200000.00

150000.00

100000.00

50000.00

0.00
Financial Year

2018-19 2019-20 2020-21 2021-22

Figure 18: Banknote circulation in Bihar and Jharkhand

ANALYSIS OF CURRENCY IN CIRCULATION IN BIHAR AND JAHRKHAND

(DENOMINATION WISE)

The volume of banknotes in circulation climbed by 8.9 % during 2021-22. This is in comparison
to a growth of 10.93% % in volume during 2020-21. As of the 31st of March in 2022, the volume
of banknotes with denominations of 20 and 500 shown a high growth of 350.35% and 30.26%
respectively, which is an increase from the previous figure of the 31st of March in 2021. Further
we have seen the growth of denomination of 10, 200 with the increase of 6.73% and 9.08%
respectively as of March 31, 2022.

Financial Year Banknote Circulation in Bihar and Jharkhand of low denomination (pieces in lakh)
2.00 5.00 10.00 20.00 50.00
2018-19 12889.20 14322.26 49702.41 1342.98 37309.94
2019-20 12878.45 14597.71 54030.84 1704.37 32003.29
2020-21 12879.32 14705.30 54984.21 658.38 29752.01
2021-22 12880.18 14806.17 58955.91 2966.53 28481.84
Source: RBI

[52]
Financial Year Banknote Circulation in Bihar and Jharkhand of High denomination (pieces in lakh)
100.00 200.00 500.00 1000.00 2000.00
2018-19 68455.45 8810.30 27003.31 9043.31 9558.77
2019-20 61600.54 15064.45 48731.02 9033.34 9449.93
2020-21 59251.56 17229.23 79863.44 9033.34 9068.48
2021-22 56909.12 18794.47 104030.58 9033.34 8811.05
Source: RBI
Table 19: Banknote Circulation in Bihar and Jharkhand of High denomination

Banknote Circulation (LDN/HDN)

250000.00 119000.00
118000.00
Volume (pieces in lakh)

200000.00 117000.00
116000.00
150000.00
115000.00
114000.00
100000.00
113000.00
50000.00 112000.00
111000.00
0.00 110000.00
2018-19 2019-20 2020-21 2021-22
Financial Year

Banknote Circulation in Bihar & Jharkhand Volume ( pieces in lakh) Total HDN
Banknote Circulation in Bihar & Jharkhand Volume ( pieces in lakh) Total LDN

Figure 19: Banknote Circulation in Bihar and Jharkhand (denomination wise)

[53]
E-TRANSACTION
A real-time aggregated picture of the e-services being supplied across several states and levels of
government was made possible with the development of the e-Taal platform in 2014 by the
Department of Electronics and Information Technology. These transactions include not just
digital payments but also other financial transactions carried out across a variety of government
services, such as payments for utility bills, tax payments, and traffic challan payments, amongst
others. The number of electronic transactions is fetched in an automated fashion by the e-Taal
platform from the apps that are linked with it.
According to information obtained from the e-taal (Electronic Transaction Aggregation and
Analysis Layer), which indicates that more than 70.3 billion e-transactions were processed in
India during the financial year 2021-22, which constitutes an increase of 58.2 percent in
comparison to the previous year.
This comes at a time when the COVID-19 epidemic has significantly accelerated trends away
from cash and cheques towards a greater dependence on real-time and digital payment methods.
Financial Year No. of e-transactions in India
2014-15 183283308
2015-16 195375392
2016-17 609879361
2017-18 12079191626
2018-19 19115760473
2019-20 34631544685
2020-21 50440299398
2021-22 79808633249
Source: e-taal
Table 20: No. of e-transactions in India

No. of e-transactions in India

1000000
No. of e-transaction ( in

800000
600000
400000
lakh)

200000
0

Financial Year

Figure 20: No. of e-transactions in India

[54]
E-TRANSACTION IN BIHAR
According to the data obtained from the Electronic Transaction Aggregation and analysis Layer
(e-taal) platform, Bihar had 3839.6 transactions per 1000 people, with the 404169329 total number
of e-transaction in Bihar. Post demonetization period, Bihar have seen an increment with the 50%
of growth in year 2017-18.
During the pandemic period, Bihar have a lesser number of e-transactions per 1000 population
because of less chances of making online payment as people were buying only life necessary
product and were avoiding regular purchases. Post pandemic Bihar have seen more the 3 times
increase in e-transaction per 1000 population with almost 363% increase in the total no. of
transactions, which shows that people of this states has started making online payments.

Financial No. of e-transactions e-transactions per 1000

Year in Bihar population in Bihar
2014-15 15577610 150.1
2015-16 9960581 99
2016-17 32769769 315.7
2017-18 71035384 684.3
2018-19 140398979 1352.5
2019-20 150737472 1452.1
2020-21 87449385 842.4
2021-22 404169329 3839.6
Source: e-taal
Table 21: No. of e-transactions in Bihar

E-transactions per 1000 population

4500
3839.6
4000
3500
3000
2500
2000
1352.5 1452.1
1500
842.4
1000 684.3
500 315.7
150.1 99
0
E-transactions per 1000 population

2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22

Figure 21: No. of e-transactions in Bihar

[55]
SURVEY ON QUALITY OF INDIAN CURRENCY NOTES (PERCEPTION OF
GENERAL PUBLIC AND TRADERS/SHOPKEEPERS)
The Reserve bank of India is conducted a survey on the quality of Indian currency notes. The
objective of the survey is to understand the perception of general public and Traders/shopkeepers
on quality of Indian currency notes currently in circulation in Bihar and Jharkhand.
We have collected 1000 responses in which Male and Female participation is 759 and 241 which
is 75.9% and 24.10% respectively. This survey consists of 882 general public and 118
traders/shopkeepers. Out of these respondents 55.10% (551) belongs to urban area and 44.90%
(449) to Rural area. Out of 1000 respondents 48.20% belongs to annual income of 1-5 lakh, 30.10%
belongs to the Upto 1 lakh, 14.40% belongs to the 5-10 lakh and 7.30% respondent belongs to
annual income of above 10 lakhs.

Gender Participation Category of Participants

11.80%
24.10%

75.90%
88.20%

Female
Male General Public Traders/shopkeepers

Figure 22: Gender Participation Figure 23: Category of Participants

Area Annual Income

7.30%
14.40% 30.10%
55.10% 44.90%

48.20%

Rural Urban Upto 1 lakh 1-5 lakh 5-10 lakh above 10 lakh

Figure 24: Area Figure 25: Annual Income

[56]
According the figure 26: Quality of Indian currency notes, we have found the different aspect of
various currencies. We can see the perception of general public and trader/shopkeepers for the
various denominations. For the 10 Rupee denomination participants has shown the negative review
on the quality of these notes, as 248 respondents states that the quality of these notes in circulation
is Very Bad and 271 states the Bad. As overall quality of 10 Rupee denomination is
unsatisfactorily. For the 20 Rupee denomination we can see the mix review as 258 people seems
to be okay, and 264 people review are bad ones. For the 50 Rupee denomination, 272 people
believe that quality of these currency in circulation is good and 296 respondents seems average.
For the 100rupee denomination we can see that the quality of good notes in circulation is higher
as compared with other aspects. 34.2% of respondents in 200 Rupee recorded the quality of notes
in circulation is good and 26.8% seems good. For the 500 Rupee denomination we can see 37.2%
thinks, quality of these notes in circulation is very good with 30.4% respondents feels good.
Overall, quality of Higher denomination notes in circulation is on the positive side and with 500
denomination showing higher trends. For the lower denomination especially 10 Rupee and 20
Rupee denomination results are unsatisfactorily, on more circulation of LDN is one these reasons.

Quality of Indian currency notes

400
Count of Participants

350
300
250
200
150
100
50
0
10 20 50 100 200 500
Currency

Very Bad(1) Bad(2) Ok(3) Good(4) VeryGood(5)

Figure 26: Quality of Indian Currency notes

[57]
CONCLUSION AND RECOMMENDATIONS

In accordance with, Section 27 of the RBI Act of 1934 mandates a duty placed on the Bank to
maintain the quality of the notes that are issued. As a result, the Bank developed and published a
set of regulations known as the "RBI Note Refund" Rules were published for the first time in 1935.
In 1975, a new regulation manual was published, an effort to replace the element of discretion that
was previously vested in the currency officers with carefully stated regulations that are meant to
test and prove the validity of the notes. This will get rid of the element of discretion that was
previously vested in the currency officers. Despite these efforts, the number of claims against
soiled and mutilated notes went on increasing and the quality of notes in circulation was fast
deteriorating. It was no longer possible, using the procedures and approaches that were previously
utilised for currency management, to keep the quality of the notes that were now in circulation.
Therefore, in order to address this issue in a timely manner, the Bank announced the "Clean Note
Policy" in the month of January 1999. As a consequence of the Bank "Clean Note Policy," the
availability of the production of new banknotes and coins has expanded to a sufficient level as a
result of the establishment of new printing presses and the modernization of the printing presses
and mints that were already in operation. The majority of the soiled and mutilated bank notes that
were previously in circulation have already been removed from circulation.
Thus, the Bank’s ‘Clean Note Policy’ is showing good results and being implemented successfully.

There are few recommendations which can help to improve the Clean Note policy in these states:
➢ Awareness program regarding the Clean Note policy: More public awareness programs
should be organized by the Currency Management Department, which should target
various focus groups, educational and government organizations, as well as the general
population.
➢ Imposing fine by RBI to different banks branches as they refused to take soiled, mutilated
notes.
➢ Encourage the public about the use of coins as many people refuse to take the coins.
➢ RBI should incentivize the currency chest of various bank branches for collecting a more
amount of soiled notes, mutilated notes.

[58]
REFERENCES
1. [Link]
2. [Link]
3. [Link]
4. [Link]
5. [Link]
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8. [Link]

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