RBI : Over the past few weeks, India has witnessed a confusion around the legitimacy of Star series ₹500 notes.
The developments have been a subject of discussion for the citizens in some social media platforms where they discuss whether or not it remains a legal tender or it has to be taken to the banks.
The Reserve Bank of India (RBI) has now issued a categorical clarification on this, bringing down the curtain on the misinterpretations that had even started to cause embarrassment on daily purchases across the nation.
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What are Star Series banknotes?
But before I get to the controversy, let’s first cover what are actually Star series notes. Special issue notes have a small star (*) printed next to the serial number.
The RBI puts these notes in circulation against the faulty notes, which are found during printing. To avoid disrupting the sequential serial number, the remarks one is simply added to the replacement note rather than reissuing the banknotes.
Star series notes are completely regular replacement notes and are used by RBI to maintain continuity in numbering, says Dr Arvind Virmani, ex-Chief Economic Advisor to the Government of India.
“They are made using the same safety components and materials as regular notes, with the ‘star’ being the only differentiator.”
How the Confusion Began
The rumour-mill seems to have started with a number of misleading WhatsApp forwards and social media posts suggesting that Star series ₹ 500 notes are being withdrawn by banks.
Some messages went so far as to say these notes were counterfeit, or would soon be worthless. With such rumors taking hold, news spread of shopkeepers, auto-rickshaw drivers, and even some local businesses refusing to accept the legal tender notes.
Rahul Bajaj, a 42-year-old shopkeepers in Delhi’s Karol Bagh market, narrates the story: “During almost one week, ATM users and shop customers would get concerned when I gave them Star series notes for change.
Some wouldn’t even take them. It resulted in completely unnecessary stress on routine transactions.”
RBI Official Clarification
In response to the ever increasing confusion, the RBI released an official statement reassuring the public that Star series notes are still fully valid legal tender.
The Reserve Bank of India has seen messages circulating on WhatsApp and social media that it will not accept ₹500 denomination banknotes of the Mahatma Gandhi (new) series having the inset letter ‘Star’ in the number panel.
“RBI is also taking necessary steps to supply ₹500 denomination banknotes to the public.
These banknotes will be available in adequate amount at all branches of banks and customers do not have to approach the Regional Office of RBI for this purpose,” it said.
The central bank also clarified that the ‘star’ distinguishment is only applied as a mark to identify the replacement notes and does not affect their legitimacy or their value.
The RBI also said people should not trust what they hear and only look out for official communication from the bank when it comes to exchange of currency issues and that they should not believe in rumours that are floating in the social media.
Security part of Real ₹500 Notes
Given the complexity, experts in banking industry have been advising people to get to know the security features of real ₹500 notes, whether or not they have star symbol. These features include:
Windowed demetalised security thread with inscriptions ‘भारत’, RBI
At center is a vignette of Mahatma Gandhi
Additiona inscription by micro-lettering ‘RBI’ and ‘500’
Number panel with numerals ascending from down towards top coming only on top left and bottom right side
Date of printing at the back
Its logo and slogan is Swachh Bharat sub image upright S.svg Swachh Bharat Swachh Bharat.jpg ”स्वच्छ भारत”.
Cuvio norskar denomination in 15 languages indicated in language panel
“None of the above-mentioned security features differ on regular and Star series notes,” states Sanjay Nayar, a senior banking official who has worked for more than 25 years in the sector.
“The only thing different between these balls and the last ones are the numbers,” he said.
Effects of the Misinformation Campaign
The groundless stories of Star series notes had already in some places produced very material economic troubles. Small businesses also reported slower transaction rates as customers and vendors examined ₹500 notes with more focus.
Some notes possibly went to redeem against other people’s head loads, or to unscrupulous middlemen in places where bank literacy is low – creation of fake bank reserves ex nihilo.
“Since a few days, we’ve all been arguing mad over these star notes,” says Lakshmi Narayan, a vegetable vendor at Chennai’s T. Nagar market. Some customers would examine every note I handed them and frown at the ones with stars.
It had an impact on my business as transactions were drawn out and occasionally I lost custom as some customers did not have alternative notes to pay with.”
Digital Literacy and Financial Education
Analysts have noted the spread of this misinformation demonstrates the need for greater digital and financial literacy across society at large.
In today’s digital world of fast-moving information, it is ever more important to be able to differentiate between legitimate sources and false assertions.
“This incident shows how, when a system is rife with human error, our financial system can collapse due to rumours,” Dr Shikha Sharma, Director, Centre for Financial Literacy and Inclusion – IFMR Holdings.
“We need stronger defenses against financial misinformation and education programs that will help prepare citizens to not just act on past accounts, but to verify claims before using them.”
The RBI has been making efforts to improve financial education by setting up FLCs all over the country.
The focus of these centers is to deliver fundamental financial education to different strata of society, especially in rural and semi-urban sectors, but also in urban areas.
What to Do With Star Series Notes?
Here’s RBI’s position on this: Treat the Star series ₹500 notes on par with all other ₹500 notes. They are acceptable for all transactions or payments as cash in reserve or deposited in bank accounts without any fussy or inconvenience at all.
“There’s no need to hoard money right now; no one will take them. Want to rush to banks to exchange these notes do so… there’s absolutely no need.” stresses Yogesh Singh, a spokesperson from the RBI. “
“ ”These notes continue to be legal tender, they can be used just like any other banknote.””. Citizens should have trust in their technology, they should use them freely.”
Telling Apart Real and Forged Notes
Although not a determinant criteria for the authenticity of a note, the RBI asks members of the public to stay cautious of fake currency. The following clues can assist in recognizing genuine notes:
Touch the paper: Real notes have a unique feel thanks to the special paper they are made from.
The watermark: Place the note against light to view the water mark portrait of Mahatma Gandhi.
Examine the security thread: The security thread should move from green to blue when tilted.
Check micro-lettering: Under a magnifying glass, micro-lettering – ‘RBI’ and ‘500’ is visible.
Use UV light if you have it: With UV light, some features on genuine notes will glow.
“These existing security features must be the subject matter of focus and analysis, and not whether the note has a star mark or not,” says former RBI Deputy Governor, K.C. Chakrabarty. “The star is just an accounting element when printing.”
RBI’s Continued Efforts Against Spam and Misinformation
The central bank admitted it needs to more quickly respond to foreign currency rumors in the future.
After this incidence, the RBI has said it will set up a specialised unit for monitoring social media to keep track of such misinformation on currency and banking.
The RBI is also working with top social media platforms for a fact-checking framework for financial news.
The goal of this collaboration, is to flag and debunk false claims involving money, the banking system and economic policy before they gain widespread acceptance.
The Star series ₹500 note controversy is a reminder of how misinformation can spread and its real-world implications.
The clear position of the RBI should set the citizens’ minds at rest that these notes are fully legal and valid for all transactions and there is no basis to refuse them.
The challenge going forth is how much of a guard you can establish against people who simply do not come forward with those kinds of outlandish misrepresentations and a growing level of financial literacy.
As India marches ahead on the path of financial inclusion and digital transactions, the resilience to misinformation gains even more significance.
It is advised to cross-check with reliable sources and report such businesses to the concerned law enforcing agencies, if required.
And don’t forget that when it comes to ₹500 notes of the Star series, India’s central bank has a clear message — keep them, you can use them and not feel guilty about it: These notes are as good as any other ₹500 note you may be using elsewhere.
