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No major rush as banks start accepting ₹2,000 banknotes for exchange
RBI has advised banks to maintain “daily data on deposit and exchange” of ₹2,000 banknotes in a specific format and provide waiting space in the shade with drinking water facilities for customers
Banks on Tuesday began accepting ₹2,000 currency notes for exchange days after the Reserve Bank of India (RBI) on Friday last announced the withdrawal of the highest-value currency notes from circulation.
RBI has advised banks to maintain “daily data on deposit and exchange” of ₹2,000 banknotes in a specific format and provide waiting space in the shade with drinking water facilities for customers.
In Guwahati, there was no major rush at banks. Business was normal at both private and public sector banks in the city. “There is no rush as yet for customers to deposit ₹2000 notes in our branch. Until Monday, a few customers deposited small amounts of ₹2000 notes. No special measures such as setting up separate counters to handle such customers have been taken yet. But we will do so if needed,” said Biltu Rai, the manager of the Bhangagarh branch of Punjab National Bank.
Prasidh Singh, a pensioner who was at a State Bank of India (SBI) branch in Ranchi for the exchange, said his tenant gave him ₹2,000 notes long back and he had to deposit that money. An SBI staffer said only three people prior to Singh turned up to exchange notes in the morning.
At an IDBI Bank branch in Jaipur, only three of around 20 customers had come to deposit ₹2000 currency notes for exchange until 11am.
RBI governor Shaktikanta Das on Monday said there was no reason for people to rush to banks for exchanging these banknotes, citing adequate availability of small denomination notes and a fairly long exchange window of over four months.
He maintained the withdrawal of banknotes from circulation would not have any significant impact. Das said the notes constituted less than 11% of total currency in circulation.
The ₹2,000 notes will continue to have legal tender status, allowing people to use them to buy goods and services.
Das did not comment on whether the high denomination notes would be legal tender beyond September 30. He said RBI will be sensitive to the requirements and adequacies of people. “...there may be people outside India who require time to exchange. We will look into all these issues and resolve them.”
Das said the deadline was to ensure people take the matter seriously. He added that if they had kept it open-ended, it may not have been taken seriously.
A government official aware of the matter told HT that the September 30 deadline and the status of legal tender could be reviewed in due course. The withdrawal of legal tender status requires the government’s approval.
RBI first stopped printing ₹2,000 notes in 2018-19 and then started reducing it from circulation. Thus, the total value of these banknotes in circulation fell to ₹3.62 lakh crore, or 10.8% of all notes on March 31, 2023, from ₹6.73 lakh crore on March 31, 2018 (or 37.3%).
Das said the large denomination notes were not used for day-to-day transactions and therefore, economic activity will not be impacted. He clarified that while RBI has not specified any additional procedure for depositing the notes, bearers will have to follow the existing rules. He cited an income tax rule and said if customers deposit cash above ₹50,000 then they have to produce their PAN cards.
Das maintained the withdrawal of ₹2,000 banknotes from circulation will have a “very, very marginal” impact on the economy. He dismissed as “speculative” the idea that the ₹1,000 note could return.
He said the withdrawal was part of “currency management”. He added the high denomination notes fulfilled their purpose of rapid re-monetisation after the November 2016 demonetisation. He added that the central bank expects most of the ₹3.62 lakh crore in circulation in ₹2,000 notes to return to the banking system by September 30.
