Reserve Bank of India’s rationale behind Rs 200 note

The Rs 200 note, to be introduced in the market on Friday, is not just another legal tender, but a  denomination with a purpose.
Image courtesy ( Twitter @RBI)
Image courtesy ( Twitter @RBI)

MUMBAI: The Rs 200 note, to be introduced in the market on Friday, is not just another legal tender, but a denomination with a purpose. On the face of it, the latest currency addition appears to be designed with added security features and introduced to facilitate ease of transactions, replace soiled bank notes, tame inflation and combat counterfeiting. However, according to the central bank, the move was to arrive at an optimal mix of currency denomination.

“The optimal system of denominations of currency (coins and notes) is one that would minimise the number of denominations and concurrently increase the probability of proffering exact change,” the Reserve Bank of India said on Thursday. Currently, many countries have opted to use a near variation of the Renard Series, that is, 1:2 or 1:2.5 ratio between adjacent denominations of currency, which means that the denomination should be twice or two-and-half-a times of its preceding denomination. Such a ratio allows an exchange of value ordinarily in a maximum of three denominations. In India, we have currency denominations of Rs 1, 2, 5, 10, 20, 50, 100, 500 and 2,000.

“As such, in the lower end of the denomination series, Rs 200 is the missing one,” it explained.
In order to achieve the optimal system of currency that would minimise the number of denominations while increasing the probability of proffering exact change, especially at the lower end of denominations, RBI said, there was a logical need to introduce the missing denomination of Rs 200, which will make our currency system efficient.

“Provision of the new denomination, therefore, would facilitate exchange, particularly for the common man who deals with denominations at the lower end,” it said.
The new denomination has Motif of Sanchi Stupa on the reverse, with Bright Yellow being the base colour of the note, RBI said in a statement. Recently, the RBI had introduced new fluorescent blue notes of Rs 50 bearing the motif of ‘Hampi with Chariot’.

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