Currency in circulation continued to expand at a healthy pace during FY26, with both banknotes and coins registering growth, while the withdrawal of ₹2,000 denomination notes moved closer to completion, according to the Reserve Bank of India Annual Report FY26.
The report showed that the value and volume of banknotes in circulation increased by 11.9% and 10.5%, respectively, during 2025-26, reflecting sustained demand for physical currency despite the rapid growth of digital payments across the country.
₹500 notes dominate circulation
The ₹500 denomination continued to account for the largest share of banknotes in circulation in volume terms during FY26. It was followed by ₹10 denomination notes, underscoring the continued importance of both high-value and widely used low-value currency in the economy.
The central bank said maintaining the quality, security and availability of currency remains a key priority amid evolving payment preferences.
Withdrawal of ₹2,000 notes almost complete
The RBI reported significant progress in the withdrawal of ₹2,000 denomination banknotes from circulation. The withdrawal process, which began following the RBI’s announcement on May 19, 2023, continued during FY26. As of March 31, 2026, 98.45% of the ₹3.56 lakh crore worth of ₹2,000 banknotes that were in circulation at the time of the announcement had been returned to the banking system.
The facility for exchange and deposit of ₹2,000 notes remains available at the RBI’s 19 Issue Offices. Customers can also send ₹2,000 notes through India Post from any post office in the country to any of these Issue Offices for credit to their bank accounts.
Coin circulation also expands
Coins in circulation also recorded growth during FY26, with total value increasing 11.4% and volume rising 4.5% compared to the previous year.
As on March 31, 2026, coins of ₹1, ₹2 and ₹5 denominations together accounted for 80.7% of the total volume of coins in circulation. In value terms, these denominations represented 60.2% of the total coin circulation.
The data highlights the continued relevance of lower denomination coins in facilitating everyday transactions across the country.
Soiled note disposal declines
The disposal of soiled banknotes declined during FY26 compared with the previous year. According to the RBI, the lower disposal levels were primarily due to temporary disruptions caused by the replacement of Shredding and Briquetting Systems (SBS) at the central bank’s Issue Offices.
The upgraded infrastructure is expected to strengthen currency management operations and improve processing efficiency going forward.
Counterfeit note trends remain mixed
The RBI said only 2.4% of the total fake Indian currency notes (FICNs) detected in the banking sector during FY26 were identified at the central bank, with the remaining detections made by banks and other entities within the financial system.
Counterfeit notes detected in denominations of ₹10, ₹50, ₹100, ₹200 and ₹2,000 declined during the year. However, fake notes in ₹20 and ₹500 denominations increased by 47.4% and 20.5%, respectively, compared with FY25.
The central bank continues to focus on strengthening the security architecture of Indian currency to combat counterfeiting risks.
Security printing expenditure falls
Expenditure on security printing declined substantially during FY26. The RBI spent ₹4,875.2 crore on security printing during the year, compared with ₹6,372.8 crore in FY25. The decline was attributed to a lower indent for banknote printing during the year.
Focus on stronger, safer banknotes
Looking ahead to FY27, the RBI has outlined several initiatives aimed at enhancing the integrity and durability of Indian currency.
These include the introduction of new and upgraded security features in banknotes, improvements in banknote substrate quality under the Utkarsh 2029 framework, capacity augmentation for currency processing, and upgrades to existing Issue Offices alongside the opening of two new Issue Offices.
The central bank said its long-term priorities will include maintaining self-sufficiency in banknote production, increasing indigenisation across the currency production ecosystem, enhancing the lifespan and security of banknotes, and improving the overall quality of currency in circulation.
Currency management remains a strategic priority
While digital payments continue to gain momentum, the RBI’s latest annual report underlines that physical currency remains a critical component of India’s financial ecosystem. Through investments in security features, processing infrastructure and domestic production capabilities, the central bank is seeking to ensure that Indian banknotes and coins remain secure, durable and readily available to support economic activity.