INDIA. Mumbai: The Reserve Bank of India (RBI) on Friday announced that it has decided to withdraw the Rs 2,000 denomination banknotes from circulation, and the banks have been advised to stop issuing Rs 2,000 denomination banknotes with immediate effect.
However, they will continue to remain legal tender, and citizens will be able to deposit Rs 2,000 banknotes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch up to September 30, an official statement read.
The Rs 2,000 denomination banknote was introduced in November 2016, under Section 24(1) of the RBI Act, 1934, primarily to meet the currency requirement of the economy expeditiously after the withdrawal of the legal tender status of all Rs. 500 and Rs. 1000 banknotes in circulation at that time.
“The objective of introducing Rs. 2,000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, the printing of Rs 2,000 banknotes was stopped subsequently in 2018-19,” stated the RBI. About 89 percent of the Rs 2000 denomination banknotes were issued before March 2017 and are at the end of their estimated life span of four-five years.
The total value of these banknotes in circulation has declined from Rs. 6.73 lakh crore at its peak on March 31, 2018 (37.3% of notes in circulation) to Rs. 3.62 lakh crore, constituting only 10.8% of notes in circulation on March 31, 2023.
“It has also been observed that this denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations continues to be adequate to meet the currency requirements of the public. In view of the above, and in pursuance of the “Clean Note Policy” of the RBI, it has been decided to withdraw the Rs. 2000 denomination banknotes from circulation,” the RBI statement added.
It may be recalled that the RBI had undertaken a similar withdrawal of notes from circulation in 2013–2014. To ensure operational convenience and to avoid disruption of the regular activities of bank branches, the exchange of Rs. 2000 banknotes into banknotes of other denominations can be made up to a limit of Rs. 20,000 at a time at any bank starting May 23.
All banks shall provide deposit and/or exchange facilities for Rs 2000 banknotes until September 30. The facility for the exchange of Rs. 2000 banknotes up to the limit of Rs. 20,000 at a time shall also be provided at the 19 Regional Offices (ROs) of RBI having Issue Departments from May 23.