New Delhi, Jan. 27 -- The Centre is exploring multiple ways to make small-denomination currency notes more widely available, in a move to address a persistent shortage that has plagued everyday cash transactions nearly a decade after demonetization.

The proposal includes a new kind of currency-dispensing machine to issue Rs.10, Rs.20 and Rs.50 notes on demand, a 'hybrid ATM' that can exchange large notes for smaller denominations and coins, and a move to push the central bank to print more small denomination currency notes, according to two officials familiar with discussions within the government.

"A prototype of low-denomination currency dispensing machines is currently being tested under a pilot project in Mumbai," the first official...