According to sources, Maoists have stashed over Rs 7,000 crore at their dumps in Bastar region.
Following the move, the state police have increased security at banks, ATMs and other economic establishments in the insurgency-affected pockets, particularly Bastar.
"As per intelligence inputs, the ban on higher currency has frustrated the Naxals and they may target ATMs, banks, post offices and other business establishments in near future in the areas of their presence," Special Director General of Police (anti-Maoist operations) DM Awasthi said.
"In view of it, security forces in all the districts, particularly those Naxal-affected, have been alerted and asked to enhance security of such establishments," he said.
According to Mr Awasthi, Maoists collect crores of rupees through levy and extortion and keep cash with them or in the dumps in forests for their activities and distribution among their cadres and supporters.
With the demonetisation of Rs 500 and Rs 1,000 notes, Maoists might make attempts through various ways via their local supporters or villagers to deposit the money or exchange it in banks. Therefore, checks are also being conducted to intercept unaccounted cash in these areas, he said.
Notably, police had recovered unaccounted cash of Rs 44.25 lakh, in the denomination of old Rs 500 and Rs 1,000 notes, and jewellery worth Rs 2 lakh from possession of a man in the Maoist-affected Kondagaon district on Friday.
Earlier, in 2014, police had seized Rs 29 lakh from a Maoist dump in the Maoist-hit Rajnandgaon district.
Besides, after a gun-battle with ultras, security forces had recovered Rs 8 lakh in Gariaband district while in another incident, Rs 1 lakh in Sukma district this year.
A senior police official of Bastar range claimed that Maoists would suffer a big blow as they have concealed over Rs 7,000 crore cash alone in Bastar region, which is fighting the menace of Left Wing Extremism since past three decades.
"We will not let them deposit or exchange the money in banks. Security forces have been alerted to keep a track of activities of Maoists and their supporters. Patrolling has been intensified in interior forests and bordering areas," he said on condition of anonymity.