The Reserve Bank of India (RBI) has made a surprising announcement to withdraw the Rs 2,000 currency notes from circulation.
However, the public has been given time until September 30 to either deposit these notes in their bank accounts or exchange them at banks.
Unlike the sudden demonetization in November 2016 when the old Rs 500 and Rs 1,000 notes were invalidated overnight, the Rs 2,000 notes will continue to be considered legal tender until September 30.
Reserve Bank of India (RBI) to withdraw the Rs 2,000 currency
The RBI has instructed banks to cease issuing Rs 2,000 notes immediately. There is no specified limit for depositing these notes in bank accounts, but individuals can exchange a maximum of Rs 20,000 (10 notes of Rs 2,000) for other currency notes at a time.
This move has been taken due to concerns about the highest denomination notes being used to hoard black money. The printing of Rs 2,000 notes had already been halted in 2018-19, and they were rarely in circulation.
The Rs 2,000 banknote was introduced in November 2016 to quickly meet the currency demand of the economy after the withdrawal of all Rs 500 and Rs 1,000 notes at that time.
The RBI has observed that the Rs 2,000 denomination note is not commonly used for transactions, and the stock of banknotes in other denominations is sufficient to meet the currency requirements of the public.
In line with the "Clean Note Policy" of the RBI, the decision has been made to withdraw the Rs 2,000 denomination banknotes from circulation. However, these notes will still be considered legal tender.
The RBI has urged the public to deposit the Rs 2,000 banknotes into their accounts or exchange them for banknotes of other denominations at any bank branch. Deposits can be made without any restrictions, following existing instructions and applicable statutory provisions.
To ensure convenience and avoid disruption, individuals can exchange Rs 2,000 banknotes for banknotes of other denominations up to a limit of Rs 20,000 at a time at any bank, starting from May 23, 2023.
The RBI has directed all banks to provide the facility to deposit and/or exchange Rs 2,000 banknotes until September 30, 2023, to complete the process in a timely manner and allow ample time for the public.
Furthermore, the 19 Regional Offices of the RBI with Issue Departments will also provide the facility for the exchange of Rs 2,000 banknotes up to the limit of Rs 20,000 at a time starting from May 23, 2023.
It is worth noting that about 89% of the Rs 2,000 denomination banknotes were issued before March 2017 and are nearing the end of their estimated lifespan of 4-5 years. The total value of these banknotes in circulation has decreased significantly from its peak in March 2018.
Conclusion
In summary, the RBI has decided to withdraw the Rs 2,000 currency notes from circulation, providing the public with the opportunity to deposit or exchange them until September 30, 2023. This move aims to address concerns about hoarding of black money and the limited usage of the highest denomination notes.
