How are currency notes issued in India

The RBI announced that it would issue Rs 200 notes on Friday. The new currency note is said to solve the problem of smaller denominations since demonetisation of Rs 500 and Rs 1,000 and the introduction of new Rs 500 and Rs 2,000 notes. The new notes will be a middle denomination between Rs 100 and Rs 500 and are touted to ease the problem of liquidity.
Here's what you need to know more about the new note.

The Rs 200 note will have a base colour of bright yellow. It will feature a portrait of Mahatma Gandhi in the centre, Ashok pillar emblem on the right and the Sanchi Stupa motif on the reverse. It will also feature the signature of RBI Governor Urjit Patel and numeral 200 in Devnagri script. It will also have a number panel on the top left side and bottom right side with numerals growing from small to big. Also, since the length of the new note is said to be different, ATM manufacturers will need to test the notes and calibaration will need to be done accordingly.

Indian currency, or any currency note for that matter, isn't made from regular paper. Indian notes contain pulp of cotton and balsam. Security threads and watermarks are must-have elements of design and should be visible when held against light. The intaglio ink is used for imprinting the main elements on the note including the governor's signature, promise clause, RBI seal and the Ashoka Pillar emblem. It is the job of the RBI to enhance security features on currency notes to reduce forgery. So, essentially, the watermarks and security threads, too, are the RBI's responsibility. Optically variable ink or colour-changing ink is a new security feature that the RBI has adopted and is being used in the new Rs 500 and Rs 2,000 notes. The colour change will be visible when the note is held up to a light source.

The new notes of Rs 500 and Rs 2,000 are being printed at currency printing presses at Dewas, Nashik, Mysuru, and Salboni. It could be concluded that the new Rs 200 notes, too, are being printed at these locations. And it takes upto eight days to finish printing a batch of notes. This could explain the long queues caused by shortage of notes when the government demonetised Rs 500 and Rs 1,000 notes.

Prior to all this, however, design of new notes is approved by central government, on the recommendation of the central board of the Reserve Bank of India. Currency notes with the new rupee symbol started circulation in January 2012. Design, production and management of currency rests with the RBI. They also have to ensure adequate supply of genuine and clean notes.

The denomination to be printed, dimensions and the sociocultural motifs featuring on the reverse of the currency notes are also decided by the RBI. The motifs are usually a reflection of the current socio-cultural scenario or the changing world view. As per section 24 of the RBI act of 1934, the maximum denomination of a currency note RBI can issue is 10,000. If the denomination has to be bigger than that, the RBI act will need to be amended. The number of notes to be printed, too, is decided by the RBI, keeping in mind factors like inflation, GDP growth, replacement of soiled banknotes and reserve stock requirements.