RBI to withdraw Rs 2,000 currency notes from circulation

Mumbai: The Reserve Bank of India on Friday announced withdrawal of Rs 2,000 currency notes from circulation, and existing notes in circulation can either be deposited in bank accounts or exchanged by September 30.

The bank notes in Rs 2,000 denomination will continue to be a legal tender, the RBI said in a statement.

In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, the RBI said exchange of Rs 2,000 bank notes into bank notes of other denominations can be made up to a limit of Rs 20,000 at a time at any bank starting from May 23, 2023.

The 2,000 denomination bank note was introduced in November 2016 after the Modi government had introduced demonetisation of Rs 500 and Rs 1,000 notes. As per RBI, the objective of introducing Rs 2,000 notes was met once banknotes in other denominations became available in adequate quantities.

The RBI had stopped the printing of Rs 2,000 banknotes in 2018-2019. Also, about 89 per cent of the 2,000 denomination notes issued before March 2017 are said to be at the end of their estimated lifespan 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.

The RBI observed that the Rs 2,000 denomination is not commonly used for transactions and the stock of other denomination notes is adequate to meet the currency requirement of people.

The decision was taken as per the ‘Clean Note Policy’ of the central bank. The people may deposit Rs 2000 banknotes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch. Deposit into bank accounts can be made in the usual manner, that is, without restrictions and subject to extant instructions and other applicable statutory provisions.

The exchange of 2000 banknotes into banknotes of othe denominations can be made upto a limit of Rs 20,000/- at a time at any bank starting from May 23, 2023.