Reserve Bank to replace old currency series from 1996 and 2000

Mumbai: The Reserve Bank of India has decided to withdraw currency issued in 1996 and 2000 from circulation in a bid to curtail the circulation of counterfeit notes.

Old currency in the denominations of Rs1,000 and Rs500 of the 1996 series would be phased out and replaced with new currency that will have added security features. The currency notes would be replaced by the 2006 series, Mahatma Gandhi series notes that have more security features built in.

The RBI will remove from circulation all notes of the 1996 and 2000 series of the above denominations, by not reissuing them to the public once deposited with the banks. Replacement of other denominations of the old series may be carried out as well at a later stage.

Withdrawal of currency is a process followed by central banks worldwide, mainly to replace old currency notes with new ones, or to remove counterfeit currency from the system. Beyond the stipulated date, currency of the series no longer bears legal tender. By rendering the entire series illegal, counterfeit currency in that range also becomes useless automatically.

Most counterfeit notes of denominations of Rs10, Rs20, Rs50 and Rs100 are also said to be of the 1996 and 2000 series. Intelligence sources had also warned of the country being hit by "economic terrorism" that could lead to losses of up to $51 billion because of the fake currency in circulation.

The RBI spokesperson clarified that these notes are not being withdrawn, saying that there was no target date for phasing out the series. She said that the currency, once deposited with the banks, would not be reissued, and therefore the phasing out depends on the pace of deposits with the banks. The risk in this scenario would be that currency not deposited with the banks would continue to be legal tenders in the hands of the public.

However, the Times of India reported that the withdrawal would take place by January 2009, and that the the central bank's move to withdraw the series was prompted by the discovery of the multi-crore fake currency scam in Uttar Pradesh. The report also said that counterfeit currency in circulation also belonged mostly to the 1996 and 2000 series. The Reserve Bank had siezed Rs12.66 lakh in fake currency from State Bank of India's Aligarh branch in December 2007, and unearthed another haul of Rs46.24 lakh counterfeit currency on 7 August, 2008 from the same branch of the bank.