RBI Clarification on phasing out of Banknotes – no phase out of smaller denomination notes
As a part of its currency management programme, the Reserve Bank phases out banknotes of old design once banknotes in new design with additional/enhanced security features are introduced. The Reserve Bank has asked banks that when they receive bank notes with old design in Rs. 500 denomination (1996 series), they may not re-issue such notes to public and instead return them to the Reserve Bank offices. Members of public will get the exchange value for the banknote of the old design tendered by them for the same value either in the new design of banknotes or by combination of other denominations or by credit to their account. All banknotes in the 1996 design/ series will continue to be legal tender.
All central banks undertake such exercise of phasing out banknotes in old designs to ensure that banknotes with enhanced security features are continued in circulation. There is no time limit set for such phasing out or for members of public to exchange them.
The Reserve Bank of India also clarifies that at present it is not phasing out any currency notes in smaller denomination, that is, Rs.10, 20, 50 and 100.
Members of public can continue to use all genuine banknotes which are legal tender.
Maybe it's time the RBI introduces notes of Rs. 10,000/- and Rs. 1 Lakh or maybe 1 Crore Denominations. At least it will be easy to display a One Crore Note or even a Hundred Crore bundle in Parliament, instead of carrying a gunny bag of notes!