New notes with higher security features introduced after demonetisation are fast becoming ‘unusable’ within just two years of circulation. According to a Hindi newspaper, this is happening because the paper quality of the new notes is not good in comparison to the earlier notes. If the currency becomes unusable, it can’t be used in ATMs as the sensors inside the ATMs can’t detect the bad quality notes.
As per the news report, the problem is so intense that apart from the new Rs 2,000 and Rs 500 notes, new Rs 10 notes issued in 2018 are also becoming ‘unusable’. The report said the banks have started categorisation of these notes under ‘non-issuable’ category. However, the government has denied any compromise with the quality of notes and said that the new notes have higher security features to stop counterfeiting.
“The new notes are becoming unusable because users in India keep the currency folded or tie it with saree or dhoti,” a senior official in the banking division of the Finance Ministry said. Banks categorise notes under ‘non-issuable’ category when the currency can’t be used in ATMs or be accepted, exchanged by the public.
Banks tag dirty, soiled or torn notes as ‘non-issuable’ and send notes to RBI for taking it out of circulation. Earlier, RBI had banned banks from categorising new notes under the non-issuable category, but after pressure from commercial banks, the central bank relaxed the rule in July 2018.