Prime Minister Narendra Modi on November 8th night took a tough decision of demonetising Rs 500 and Rs 1000 notes. Soon after the announcement made by Narendra Modi the old notes of Rs 500 and Rs 1000 did not remain a legal tender and hence in next few months the Reserve Bank of India will be piled up with old currency which will be disposed of.
According to the Reserve Bank of India data until October 28, in terms of value currency notes of Rs 17.77 lakh crore was in circulation on October 28. And, about 86 per cent of money circulation, as on March 31, was in the form of Rs 500 and Rs 1000 currency notes.
In terms of volume, a total of 9026.6 crore bank notes were circulated in India till March 31 and of the total number of currency notes, 2,203 crores or over 24 per cent consisted of Rs 500 and Rs 1,000 denominations.
Recently RBI official in a statement said that the old notes will be disposed under the Currency Verification and Processing System (CVPS).
What is CVPS?
In 2003 the then RBI Governor Bimal Jalan placed the CVPS system for faster and secured processing of soiled currency notes. Each CVPS system is capable of processing up to 60,000 currency notes per hour and during which the process to examine their genuineness is carried on. After which it is separated into a fit and unfit categories and destroys the unfit ones by shredding them. During the process, the fit notes are cut in a way and after which it is recycled into the new currency papers.
How Rs 500 and Rs 1000 notes will be disposed of?
During the CVPS process, the shredded notes are converted into briquettes weighing about 100 grams. The briquettes are sold for industrial use through a tender invitation by the RBI. The shredded currency is also recycled into various products including paperweights, calendar and files.