Why It Is In Own Interest To Print Currency Of Lower Denomination?

The war on counterfeit cash is taken to the vanguard by Modi’s demonetization move. However, a low-quality fake Rs 2000 note was noticed in Ahmedabad.( The fake 2000 notes that emerge in the market evinces a sign of the sophisticated heights that banknote counterfeiters have managed to reach.

With the advancement in printing technologies, RBI has added various features like pushing string of redesigns, use of complex colors , fluorescence , latent image and optically variable inks, watermark portraits, extremely complex machine engravings, micro letterings, numbering patterns, angular bleed lines, reflective foil patches, holographic strips etc. making the notes ever harder to copy. While government is trying to dismantle counterfeit currency, counterfeiters continue to reverse engineer, innovate and simulate all the features. The tussle between the two factions is not likely to end anytime soon.


RBI and security agencies have recovered and seized 25 lakh counterfeit notes worth Rs 122 crore between 2001 and 2014(up to 30th June). More than 13 lakh Rs 500 fake denomination notes were in circulation between 2011 and 2014.  The next most circulated counterfeit currencies were  ofRs 100 and Rs1000. ). This may sound like a relatively small number, but that's no consolation if you fall victim to a fake note.

Year 2011 2012 2013 2014  
Rs. 1000 165433 175623 55446 99050  
Rs. 500 308259 530317 386462 112981  
Rs. 100 162695 205058 169119 65875  
Others 31215 26981 16281 3450  


The overall printing and circulation of legal tenders of all denomination increased by 40% from 2011 to 2016, printing and circulation of Rs 500 notes increased by 76% and Rs 1,000 notes increased 109%, according to RBI.

Why it is in own interest to print currency of lower denomination


During  late nineties, notes of Rs 100, Rs 50, Rs 20 and Rs 10 constituted3/4th part (nearly 70%)of the cash economy. During 2004-05 the value of Rs 500 and Rs 1,000 notes in circulation surpassed the combined value of other denominations. Now, the value of Rs 100, Rs 50, Rs 20 and Rs 10 constitute only 15% of cash economy and value of money of Rs 500 and Rs 1,000 notes has catapulted to a staggering 85%.

The higher currency notes are printed and circulated, there is higher risk of counterfeit money flowing in.  The only possible solution to curb counterfeit currency is to stop the printing of high value currency.

The onus of finding the authenticity of the note lies with the note bearer. One can get the minute details of all currency notes on this website- . Deliberate use of counterfeit currency knowing to be such is punishable under IPC section 489C.

Rome was not built within a day.  A cashless society won’t be realized overnight.  It takes relentless, incremental and piecemeal progress to make that happen. India is getting to a tipping point where “cashless society” is no more considered to be a science fiction and is more of an inevitable means  to thwart corruption , terrorism , money laundering, counterfeiting, tax evading, drug peddling, human trafficking, gambling  etc.   We need to consign cash to history, slowly and systematically.

Cash dominated economy mothers black economy.  In the book “The Abolition of Cash”, author David Warwick animadverted that black market drains $660 billion from US economy, annually. According to a BBC Report, the global average growth of cash usage is 7% per year. This growth is alarming and poses bigger challenge to carry out cashless measures. Cash is still the king and is still superseding card transactions. In the same report, it is further mentioned that in 2012, there were 2.7 billion card payments, but an estimated 3.5 to four billion payments were made with cash.

The demise of cash is almost certain and the world is slowly moving in that direction.  The UN has extended its wholehearted support to make cash society a reality.  It further recommends nations to go cashless. The UN Capital Development Fund through its ‘Better Than Cash Alliance’ (BTCA) aims to segue into cashless mode universally as a part of financial inclusion by making use of mobile phones and   cards. The BTCA is financially supported by the Bill & Melinda Gates Foundation(US$3,000,000), USAID (US$3,000,000), VISA (US$3,000,000), Ford Foundation (US$1,500,000), Citigroup(US$1,500,000), UK’s The Department for International Development (US$ 250,000) and Ebay'sOmidyar Network(US$1,500,000).  The BTCA uses the technical expertise and suggestions from the leadership of the donor organizations in their programs to replace the use of cash with payment streams.  The involvement of  such entities might give rise to the  suspicion of their  vested interest in the outcome.


India has joined UN’s ‘Better Than Cash Alliance’ by announcing its flagship financial inclusion programme Pradhan Mantri Jan-Dhan Yojana (PMJDY). So far 25.98 crore Jan Dhan Bank accounts have been opened as of 14.12.2016, out of which 23.22% are zero balance accounts. Out of 25 crore accounts, 15.75 crore bank accounts are purely from rural segment. The amount that has been deposited in these 25 crore accounts exceeds Rs. 74 lakh crores. More than 20 crore  Rupay cards have been issued so far, which is a gigantic step taken by Government of India to bring rural people and poor under cashless ambit.

The whole world is enthusiastically embracing cashless economy. A whopping 417 billion cashless transactions were made in 2014.  The next step for India would be to formally ban large cash transactions like France, Spain, Italy and other countries in northern Europe are already doing. Given the perilous state of stagnating European economy, most European countries are transitioning themselves to a cashless society. Spain has banned cash transactions of more than 2,500 euros and France and Italy have both banned all cash transactions of more than 1,000 euros.

Read Also: Why it is in own interest to print currency of lower denomination?

In Sweden, thousands of ATMs are being removed permanently and most Banks of Sweden do not accept cash. (5% of the stores in Sweden have already gone cashless and a mere 2% of the Swedish economy is cash oriented. Govt. of Denmark intends to eradicate cash by 2030.

The Danish Chamber of Commerce is persuading Danish Govt. to let certain economic sectors the right to refuse cash.

According to Norway’s biggest bank DNB, 60% of Norwegian Cash flows out of Government’s jurisdiction. Therefore, DNB has publicly called for the complete elimination of all cash.

Half of all transactions are done electronically in Australia. According to Westpac Bank Research, Australia will be a fully cashless society by 2022

According to a CNBC report , 86% of Belgians have access to debit cards and 93% of all their transactions are cashless.

69% of French have access to debit cards and 92% of all their transactions are cashless.

88% of Canadians have access to debit cards and 90% of all their transactions are cashless.

88% of British have access to debit cards and 89% of all their transactions are cashless.

96% of Swedish have access to debit cards and 89% of all their transactions are cashless.

79% of Australians have access to debit cards and 86% of all their transactions are cashless.

98% of Dutch have access to debit cards and 85% of all their transactions are cashless.

This trend is the harbinger of the end of cash as we know it and many other countries will follow their suit.

The truth is also that the governments will want to discourage its citizens from using cash. With each passing day, the financials regulations will become more rigid, restrictions will become tighter, physical money will become more exiguous before cash is entirely obliterated.

The need for the government to push everyone to use digital payment is to make them dependent on the system, perpetually. It is also be a bamboozled move to bring back all the money into the banking system controlled by loansharking embezzlers. "Cashless Society" can also be a way of the government to gain full control of your finances.

Even in US, out of $US 1.4 trillion that is in circulation, each American has about $US 4,200 in cash mostly in hundred-dollar bills. Going cashless is a very bold move, but has a lot of risks. Government should address the risks, before going overboard over the ‘cashless’ agenda. Why should people keep cash in banks, when the interest rates go negative? Why should not they then hold on to their dear cash? In such cases, if money is not allowed to be kept, its pure robbery by banks.

Physical money can’t be hacked to nothing, infected by a virus, inflated by a mouse click etc. These things can happen with representative money. Government does not have a plan that addresses how folks on the periphery are supposed to live. How do you access your bank account, if you live under a bridge without power? .God forbid there's ever a power outage for any reason-all commerce would grind to a halt. This cashless drive can only be successful, as long as electricity and the internet hold up. Citizen’s obsequiousness towards government’s insidious initiatives can sometime backfire.

By bringing everyone onto digital economy, we are creating a monstrous system fife with more fraud and vulnerable to security breaches and disastrous glitches.

What is the guarantee that there won’t be any bank bail-ins? In Cyprus, troubled banks removed funds from anyone who carried accounts of over 100,000 euros.

Hackers can fiddle with your hard-earned money. 359,420,698   MySpace accounts , 34,842,089 Netease accounts ,164,611,595  LinkedIn accounts ,152,445,165  Adobe accounts,112,005,531  Badoo accounts , 91,436,280 Rambler accounts , 68,648,009 Dropbox  accounts , 65,469,298 tumblr accounts  have been hacked in the past.

Wealth can eroded completely with a few key strokes

Disgruntled and Crooked bank employees can copy, sell, fiddle with  your data

An electromagnetic pulse can wipe out your entire record.

A virus can inflate, deflate, and wipe out your money.

Digital footprints are hard to erase , even you want to erase them

In a developing country like ours, where uninterrupted power supply is a pipe dream, going cashless does not suit our conditions.

Government cannot comb through your every single transaction to validate and provide protection.  Reconciliation system is also not well evolved to protect you from transactional errors. Unless and until, these things are addresses, going cashless will always be a dream.