The Centre is examining a proposal from the Reserve Bank of India (RBI) to introduce Rs 200 denomination currency notes to improve the cash situation, top central banking sources.

According to the sources, a smaller denomination note will improve liquidity. In November last year, the Centre announced the demonetisation of Rs 1,000 and Rs 500 notes. While a new Rs 500 note was introduced with added security features, a new Rs 1,000 note was not reintroduced. Instead, a new Rs 2,000 denomination currency note was introduced.

There are two bank note printing presses in the country — Bharatiya Reserve Bank Note Mudran Private Limited — a subsidiary of the RBI, and the government-owned Security Printing and Minting Corporation of India Limited. According to RBI, smaller denomination notes constituted only 13.6% of the total currency in circulation, in value terms, as at March 2016. The higher denomination notes — Rs 500 and Rs 1,000 — that were demonetised constituted 86.4% of the currency in circulation.