India's new ₹100 note will be relatively more expensive to introduce than the others

India's new ₹100 note will be relatively more expensive to introduce than the others
  • On July 19th, the Reserve Bank of India said it would issue a new 100-rupee note.
  • Five new banknotes have been introduced since demonetisation- 10 rupees, 50 rupees, 200 rupees, 500 rupees and 2000 rupees.
  • However, the new 100-rupee note will be relatively more expensive to introduce because its size is different from the original note. Hence, banks will need to modify their ATMs.

Change is said to be the only constant, and in the aftermath of demonetisation the phrase rings true in more ways than one. Five new banknotes have been introduced since November 8th, 2016 - 10 rupees, 50 rupees, 200 rupees (which didn’t have an earlier version), 500 rupees and 2000 rupees - an unprecedented amount. And on July 19th, the Reserve Bank of India (RBI) announced the introduction of a new lavender-coloured 100-rupee note.

Introducing a new note to the economy doesn’t come cheap. The RBI’s printing expenses more than doubled to ₹79.65 billion in 2016-17, from ₹34.21 billion in 2015-16, owing to the cost of remonetisation.

A filing under the Right to Information Act in December 2016 revealed that it cost the government ₹3.54 for printing each new 2000-rupee note and ₹3.09 for printing each new 500-rupee note. In comparison, the older 500-rupee and 1000-rupee notes, which the 2000-rupee note was meant to replace, cost ₹2.50 and ₹3.17 apiece to print.

The printing of 2000-rupee notes was suspended last year given the note’s unpopularity. The government made a push towards promoting lower value notes instead, starting with the introduction of the 200-rupee note.

An additional cost for the 100-rupee note


Barring printing expenses, there are a number of other costs to introducing new notes. ATMs need to be restocked, new notes need to be transferred to the government’s issue offices and currency chests and banks need to update their note processing systems.

However, the introduction of the new 100-rupee note is expected to be more expensive than other notes, relative to their original versions, owing to its size. The dimensions of the note (66mm x 142mm) are different from the original 100-rupee note as well as the 200-rupee note.

This will lead to an additional cost - the cost of recalibrating ATMs to adjust to the note’s specifications. This is expected to cost a cumulative total of ₹1 billion alone. However, this expense will not be borne by the government, but by the country’s banks and ATM operators.

The banks already had to modify their ATMs in January 2018 when the 200-rupee note was released.This happened despite their insistence on waiting till the new 100-rupee note was introduced. Now, six months later, they will have to adjust their ATM spacing systems again.

The recalibration process involves the installation of spacing systems to separate the notes. These systems are programmed in accordance with the size of each note. A note with completely new dimensions requires an adjustment to these spacers.

The new 100-rupee note won’t be the last note to be introduced by the current government. The RBI is reported to be in the process of developing a new 1000-rupee note. Once it is introduced and the short-term adjustment to the new note concludes, Indian banks and ATM operators will finally be able to rest easy for a while.