Now that the government has decided to scrap currency notes of Rs 500 and Rs 1,000 denomination, the millions of notes will end up as briquettes that can even be used for land fillings or for making items for use at office and home and paperboard.

What happens when the notes and coins return from circulation?

Notes and coins returned from circulation are deposited at the offices of the Reserve Bank. The Reserve Bank then separates the notes that are fit for reissue and those which are not fit for reissue. The notes which are fit for reissue are sent back in circulation and those which are unfit for reissue are destroyed after processing shredded. The same is the case with coins. The coins withdrawn are sent to the Mints for melting.

The Reserve Bank of India data reportedly shows that in terms of value currency notes of Rs 17.77 lakh crore was in circulation in India on October 28.

The country’s central bank improved its processes to deal with unfit notes in 2003 when then RBI governor Bimal Jalan inaugurated the Currency Verification and Processing System (CVPS) in Mumbai Office of the Reserve Bank of India.

The currency verification and processing systems have been installed in the Reserve Bank offices for faster and secured processing of soiled currency notes. Weeding out soiled currency notes and replacing them with fresh ones are part of the Clean Note Policy being followed by the Reserve Bank of India.

How are unfit notes dealt with?

Each CVPS is capable of processing 50,000 - 60,000 notes per hour. It counts, examines the genuiness of notes, sorts notes into fit and unfit and destroys the unfit notes on-line. The shreds are on-line transported to a separate briquetting system where they are compressed into briquettes of small size. The system is also environment-friendly, as it does not create pollution that was created by burning of notes in the past.

The briquettes can be used as residual fuel in industrial furnaces. They can even be used for land fillings or for making items for use at office and home and paperboard.

Apart from weeding out soiled notes from circulation, the Reserve Bank has also taken measures to supply adequate quantities of fresh notes and preventing excessive soilage of the existing currency notes.