Rs 2,000 notes withdrawn from circulation, RBI says will remain legal tender
By India Today Business Desk: The Reserve Bank of India (RBI) has decided to withdraw Rs 2,000 denomination banknotes from circulation. However, the notes will continue as legal tender, the central bank said in a circular on Friday.
The RBI has advised banks to stop issuing Rs 2,000 denomination banknotes with immediate effect. In a circular, the central bank said that all Rs 2,000 currency notes must be exchanged before September 30, 2023.
"To complete the exercise in a time-bound manner and to provide adequate time for the members of the public, all banks shall provide deposit and/or exchange facilities for Rs 2000 banknotes until September 30, 2023," the RBI circular read.
RS 2,000 NOTES CAN BE EXCHANGED TILL SEPT 30, 2023
The central bank has asked citizens to exchange Rs 2,000 currency notes by September 30, 2023. All banks have been asked to provide deposit or exchange facilities for Rs 2,000 banknotes till September 30. However, the Rs 2,000 notes will remain legal tender.
The central bank also said in order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of Rs 2,000 notes into notes of other denominations can be made upto a limit of Rs 20,000 at a time at any branch starting from May 23.
HERE'S WHAT THE RBI HAS SAID
The Rs 2,000 denomination currency note was introduced in November 2016 following the demonetisation of Rs 1,000 and the old Rs 500 banknotes. According to the RBI, the objective of introducing the Rs 2,000 banknotes was met once currency in other denominations became available in adequate quantities. As such, the printing of Rs 2,000 banknotes was stopped in 2018-19.
Explaining the move, the RBI said, “About 89% of the Rs 2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years. The total value of these banknotes in circulation has declined from Rs 6.73 lakh crore at its peak as 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 requirement of the public.”
"In view of the above, and in pursuance of the “Clean Note Policy” of the Reserve Bank of India, it has been decided to withdraw the Rs 2000 denomination banknotes from circulation," the circular read.
HOW DOES IT IMPACT YOU?
While banks have been advised not to issue Rs 2,000 banknotes with immediate effect, citizens need not worry as the withdrawal will be carried out in a “time-bound” and systematic manner.
In a press release, the central bank said that the Rs 2,000 notes that are currently in circulation will continue to be legal tender and people can continue to use them for transactions and also receive them in payment. It may be noted that the RBI has “encouraged” the public to deposit and/or exchange these banknotes on or before September 30, 2023.
Therefore, the move to withdraw Rs 2,000 banknotes will have no immediate impact on citizens as they will get enough time to get them exchanged.