RBI Announces Withdrawal of ₹2000 Banknotes from Circulation
The Reserve Bank of India (RBI) has made a crucial decision to discontinue the circulation of banknotes in denominations of 2000 rupees. Although these banknotes will no longer be printed, they will continue to be legal currency. The move comes as the objective of introducing the ₹2000 banknotes has been fulfilled, and other denominations now adequately meet the currency requirements of the economy.
| Article and Schedule Quiz | Start Test! |
Reasons for Withdrawal
In November 2016, 2000 banknotes were introduced in reaction to the revocation of legal tender status for 500 and 1000 banknotes. This measure aimed to fulfill the urgent currency requirements at the time. However, the printing of ₹2000 banknotes was halted in 2018-19 as their purpose had been served. Furthermore, the RBI noted that the usage of ₹2000 banknotes for transactions was not common.
Declining Circulation
Approximately 89% of the 2000 banknotes were issued before to March 2017 and have already reached the end of their anticipated life-span of 4-5 years. As a result, the entire value of 2000 banknotes in circulation has reduced from 6.73 lakh crore on March 31, 2018, to 3.62 lakh crore on March 31, 2023, constituting only 10.8% of total notes in circulation. The reduction in circulation and limited usage further prompted the decision to withdraw the ₹2000 banknotes.
Clean Note Policy
The withdrawal of ₹2000 banknotes aligns with the RBI’s “Clean Note Policy.” This policy aims to maintain the quality of currency in circulation and promote efficiency in the banking system. The RBI had previously undertaken a similar withdrawal of notes from circulation in 2013-2014.
Procedures for the Public
The RBI has issued public guidelines to help with the withdrawal procedure. Individuals can deposit 2000 banknotes into their bank accounts or swap them for other denominations of banknotes at any bank place of residence. Deposits can be made in the usual manner, without any restrictions, subject to existing instructions and statutory provisions.
Exchange Process
In order to ensure operational convenience and minimize disruption to regular banking activities, individuals can exchange their ₹2000 banknotes for banknotes of other denominations. Starting May 23, 2023, this transaction can be done at any bank up to a limit of 20,000/- at a time. This exchange will involve the RBI's 19 regional offices as well as other banks.
Timeline and Legal Tender Status
While the RBI has initiated the withdrawal process, it emphasizes that the ₹2000 banknotes will remain legal tender. Individuals have until September 30, 2023, to exchange or deposit their ₹2000 banknotes in their bank accounts. After this date, banks may stop accepting ₹2000 banknotes for exchange, although they can still be deposited into bank accounts.
