By News Desk 
After phasing out the ₹2,000 denomination notes, the Reserve Bank of India (RBI) has now begun pulling back a significant number of ₹200 notes from circulation. Over the past six months, the RBI has withdrawn approximately ₹1,380 crore worth of ₹200 banknotes, sparking public concern over whether the ₹200 denomination is also being discontinued.
However, there’s no need to panic. The RBI has made it clear that it has no intention of discontinuing ₹200 notes. The ongoing withdrawal is part of a quality-control measure rather than a demonetization strategy.
Why Are ₹200 Notes Being Withdrawn?
According to RBI’s semi-annual report, the majority of the withdrawn ₹200 notes were found to be damaged, soiled, torn, or defaced. These conditions made the notes unsuitable for circulation.
Among all denominations, ₹200 notes saw the highest rate of deterioration, prompting the central bank to remove them from the market in large numbers. Some of these notes were even decomposed or marked with ink and scribbles, making them unusable.
This Isn’t the First Time
- Last year, the RBI had also withdrawn ₹1,350 crore worth of ₹200 notes for similar reasons.
- At the time, the primary cause was again wear and tear, due to high usage and poor note handling.
- Interestingly, when measured in total value, ₹500 notes top the list for being withdrawn due to damage.
Surge in Usage After ₹2,000 Notes Were Retired
Banking experts suggest that after the withdrawal of ₹2,000 notes, the demand and usage of ₹200 notes surged sharply. This resulted in increased wear and tear, leading to more damaged notes being returned from circulation.
₹500 Notes Still Lead in Total Damage
According to RBI’s report for the previous fiscal year:
- ₹500 notes worth approximately ₹6,330 crore were taken out of circulation due to damage.
- However, in the first half of the current financial year, the number of damaged ₹500 notes has decreased by 50% compared to the previous year.
- In contrast, damaged ₹200 notes have increased by 110% in the same period.
Smaller Denominations Also Affected
It’s not just the higher denominations under scrutiny. The RBI’s clean note policy also extended to smaller currency notes:
- ₹5 notes worth ₹3.7 crore were removed,
- ₹10 notes worth ₹234 crore,
- ₹20 notes worth ₹139 crore,
- ₹50 notes worth ₹190 crore, and
- ₹100 notes worth ₹602 crore were also withdrawn from circulation.
The Bottom Line
The withdrawal of ₹200 notes is not an indication of demonetization, but part of RBI’s routine efforts to ensure the quality of currency in circulation. So, if you’re holding onto ₹200 notes — there’s no need to worry. They remain legal tender, and the RBI is simply cleaning up worn-out currency for better circulation and usability.