New Delhi: If you think that Rs 2,000 notes are the highest denomination currency that India ever had, well then you must read this article on the history of the country’s highest currency notes, which no longer exist. We had higher denominations of Rs 5,000 and Rs 10,000 notes, which were introduced before Independence.
In 1938, the Reserve Bank of India (RBI) introduced Rs 10,000 notes, making it the largest denomination to have ever been circulated in the Indian market. These notes were mostly used by businesses and traders for high-value transactions. However, these notes were banned by the British government in 1946 to curb black-marketing and hoarding during World War II. These notes again found a way into India's banking system in 1954 and continued to circulate till 1978.
The Morarji Desai-led government, in 1978, decided to demonetise Rs 10,000 notes along with Rs 5,000 notes to tackle financial malpractice and curb the illegal use of large sums of money. These notes had anyway very little use for the common people; therefore, the impact of the demonetisation was almost negligible.
According to RBI data, the total cash in circulation as of March 31, 1976, was Rs 7,144 crore. Of this, Rs 1,000 notes constituted Rs 87.91 crore, or just 1.2% of the total. Rs 5,000 notes accounted for Rs 22.90 crore, while only 1,260 Rs 10,000 notes were valued at Rs 1.26 crore. Together, these high-denomination notes represented less than 2% of the overall currency in circulation.
These high-value currencies never returned to the system; however, there was a consideration to bring them back recently. Former RBI governor Raghuram Rajan had suggested that these denominations could see a return; however, the idea was later shelved.
Instead, in 2016, when the government demonetised the existing Rs 500 and Rs 1,000 notes, a new Rs 2,000 note was introduced. Then Finance Minister Arun Jaitley had reasoned that Rs 2,000 notes were introduced to fill the currency gap in the system quickly. However, on May 19, 2023, the RBI announced that Rs 2,000 notes would be withdrawn from circulation.