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The Reserve Bank of India (RBI) announced on Friday that it would withdraw the Rs 2000 note from circulation. However, the note will continue to be considered legal tender. The RBI has set a deadline of 30 September 2023 for people to exchange their Rs 2,000 notes.
In light of this decision, the RBI has advised banks to stop issuing Rs 2000 denomination notes immediately, although existing notes will remain valid.
The RBI introduced the Rs 2,000 note on 8 November 2016, following the demonetization of the Rs 500 and Rs 1,000 notes. It has been in circulation since November 10, 2016.
Withdrawal of Rs 2000 Banknotes
The Reserve Bank of India (RBI) issued a statement regarding the withdrawal of ₹2,000 denomination notes from circulation as part of its "Clean Notes Policy". The bank clarified that the ₹2,000 notes will remain legal tender. To ensure a smooth transition and allow sufficient time for the public, all banks will offer deposit and/or exchange facilities for Rs 2,000 notes until 30 September 2023.
The Rs 2000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time. The objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, printing of Rs 2000 banknotes was stopped in 2018-19.
Why RBI withdraws 2000 rupee notes?
The RBI explained the rationale for this decision, stating that approximately 89% of ₹2,000 notes were issued before March 2017 and have now reached their estimated lifespan of 4-5 years.
The total value of these banknotes in circulation has decreased from a high of ₹6.73 lakh crore as of March 31, 2018 (accounting for 37.3% of the banknotes in circulation) to ₹3.62 lakh crore, which constitutes only 10.8% of the banknotes in circulation as of March 31, 2018 to March 31, 2023. It has been observed that this denomination is not frequently used for transactions, and the stock of banknotes in other denominations it is still sufficient to meet the demands for public currency.
“In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of ₹2000 banknotes into banknotes of other denominations can be made upto a limit of ₹20,000/- at a time at any bank starting from May 23, 2023.”
Previous withdrawal and options for Rs 2000 Notes
It is worth noting that the RBI had previously implemented a similar withdrawal of banknotes from circulation in 2013-2014.
Accordingly, members of the public can deposit their Rs 2,000 notes into their bank accounts or exchange them for notes of other denominations at any bank branch. Deposits in bank accounts can be made without restrictions and in accordance with existing instructions and applicable legal provisions.
To ensure operational convenience and avoid disruption to regular banking activities, the exchange of Rs 2,000 notes for notes of other denominations will be limited to Rs 20,000 at a time at any one bank, effective May 23, 2023.
The RBI has instructed all banks to provide deposit and/or exchange facilities for Rs 2,000 notes until 30 September 2023, in order to complete the process within a specified timeframe and to allow sufficient time for the public. Separate guidelines have been issued to banks regarding this matter.
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