RBI printing more notes to build cash reserves

financial chronicle

Business, Economy

The new currencies would not be released for circulation, but would be kept as reserves.

The lack of Rs 2000 notes in the circulation was also cited as one of the reasons of crisis.

New Delhi: To avoid any repeat of cash crunch, the Reserve Bank of India (RBI) started in the last week of April printing of Rs 70,000-80,000 crore currency for reserves, which is five times more than the usual printing (Rs 10,000-15,000 crore) in normal months.

Sources said RBI would continue to print currency till it felt comfortable with reserves and there was no deadline or quantum of banknotes to be printed. “It’s the RBI which will when and where to pause printing,” said an official. The new currencies would not be released for circulation, but would be kept as reserves, “to avoid shortages”.

Printing more banknotes in March and April, and October/November is common phenomena,but this year RBI has decided to print little more in April. Also, this time mostly Rs 500 notes are being printed.

In April, the government stepped up printing of Rs 500 notes after cash crisis erupted in some parts of the country and later spread to more cities.

In the first 13 days of April when the cash crunch was felt, Rs 45,000 crore increased the currency supply, the ministry of finance had said in a circular. The lack of Rs 2000 notes in the circulation was also cited as one of the reasons of crisis, which the government suspected was being hoarded.

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