Rs 2000 notes junked, legal tender status till 30 September

The Reserve Bank of India (RBI) on Friday announced that it will withdraw the Rs 2000 currency note from circulation. The notes will continue to be legal tender till 30 September, 2023. It has advised banks to stop issuing Rs 2000 denomination banknotes with immediate effect.

The Rs 2000 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 in an expeditious manner following the demonetisation drive which resulted in revocation of the legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time, the RBI said. The objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities.

Therefore, the printing of Rs 2000 banknotes was stopped subsequently in 2018-19, stated RBI. The Central Bank had observed that this denomination is not commonly used for transactions and the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public. Hence, in pursuance of the “Clean Note Policy” of the RBI, it has been decided to withdraw the Rs 2000 denomination banknotes from circulation. Accordingly, members of the public may deposit Rs 2000 banknotes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch. To complete the exercise in a time-bound manner and to provide adequate time to the members of public, all banks shall provide deposit and/or exchange facility for Rs 2000 banknotes until 30 September, 2023.

“In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of Rs 2000 banknotes into banknotes of other denominations can be made upto a limit of Rs 20,000/- at a time at any bank starting from 23 May, 2023,” the RBI note said. About 89 per cent 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 31 March, 2018 (when 37.3 per cent of notes were in circulation) to Rs 3.62 lakh crore constituting only 10.8 per cent of notes in circulation on 31 March, 2023.

The facility for exchange of Rs 2000 banknotes shall also be provided at the 19 Regional Offices of RBI having issue departments from 23 May, 2023. “Sufficient time is being made available. So there is no fear of demonetisation or anything like that. We have given sufficient time, upto 30 September to deposit the bank notes. If you don’t have a bank account, upto Rs 20,000 per instance can be deposited at any bank branch and can even be exchanged at the RBI offices. The notes were introduced in 2016 as a quick replenishment of the value of the demonetised notes. When you withdrew Rs 500 and Rs 1000 notes, people had to be given the value of their currency notes. So Rs 2000 notes were introduced. By design itself it had to be for a period, it could not have been indefinite,” the source informed The Daily Guardian.

Asked if the move was also prompted by concern over the big notes leading to accumulation of black money, the source said, the RBI’s mandate is not black money. It added, “Our mandate is to provide transactional value and method to do that, at ease, for any person at any place and any time.”  “We are also encouraging digital transactions and have built up a huge infrastructure. With this, Rs 500 would be the highest note and if you see the transactions on a higher value, the Government also does not permit more than Rs 50,000 to be done in cash. This will also give further impetus to digital transactions,” the source added.