Demand for higher denominations on the rise.

http://www.financialexpress.com/news/bigger-bang-for-the-buck/999043/

The demand for higher denomination currency notes is clearly surging. According to an analysis on currency usage in RBI’s annual report (August 2012), notes of denomination 500 and 1,000 together accounted for 82 per cent of the total value of the banknotes in circulation till end-March 2012, sharply higher than the 76 per cent just two years earlier.

The analysis also shows that at 12.5 per cent, the growth in value of banknotes far outpaced the growth in volume terms (7.4 per cent) in 2011-12. While as an economy grows, there is a natural increase in the demand for bank notes of higher denomination, added to this is the pressure on account of the sustained spell of high inflation, or the rate at which the general level of prices is rising.

The other interesting aspect to note is that despite increasing spread of technology-driven non-cash modes of payment, the demand for banknotes and coins continues to rise. While the Reserve Bank of India is the sole authority to issue banknotes in India, one rupee notes and coins of all denominations are issued by the government, even though they are put into circulation only through the central bank. The RBI carries out the issue of notes and management of currency through its 18 issue offices, one sub-office at Lucknow, a currency chest at Kochi and a wide network of 4,221 currency chests and 4,018 small coin depots.