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India’s new Rs 20,000 note: The first Indian note that won’t be counterfeit and won’t get counterfeiters banned

NEW DELHI: The government on Thursday banned the circulation of counterfeit and “misbranded” Rs 20 notes in India, with the aim of curbing the growing counterfeit economy that has driven up the rupee since its inception in 2014.

The move comes as the government faces growing pressure to curb the rising popularity of counterfeiting in the economy, which is believed to account for about a third of India’s gross domestic product (GDP) and accounts for more than half of counterfeits in the country.

On Monday, the Reserve Bank of India (RBI) said it had banned Rs 20 bills, which have been widely used since the demonetisation of high-value banknotes last year, as well as fake Rs 10 notes and counterfeit notes.

The RBI said it is also considering banning counterfeiting and counterfeit bills in the next couple of months.

The ban was in response to a spate of counterfeited notes being circulated in the nation, with at least 10,000 of them being distributed in the past week, said Praveen Kaur, a former RBI governor.

The government said the ban was necessary to protect the nation from a growing counterfeiting menace.

The announcement came as the central bank raised its benchmark rate to 6.5 per cent from 5 per cent on Thursday, a move that could be seen as a reaction to the increase in counterfeit notes and to the country’s economic slowdown.

The Reserve Bank said it was taking steps to counter the threat posed by counterfeit notes, including raising the benchmark rate from 6.25 per cent to 6 per cent by June next year.

On Thursday, Prime Minister Narendra Modi said the government would soon introduce a scheme to introduce a cashless economy, a step that will be implemented in a phased manner.

“The government is now preparing to introduce an innovative digital payments scheme for the benefit of the people of India,” Modi said at the start of a three-day visit to India, adding that the scheme would be implemented gradually.

The prime minister said the initiative would also be launched on a trial basis and would be rolled out on an ongoing basis.

Modi also reiterated that India would work to establish a new digital payments system.

India’s currency has been pegged to the U.S. dollar for nearly two decades.