Why RBI decided to withdraw ₹2000 notes within 7 years
The RBI on Friday announced the withdrawal of ₹2,000 currency notes from circulation.
The Reserve Bank of India (RBI) on Friday announced its decision to withdraw the ₹2000 denomination banknotes from circulation as part of its “Clean Note Policy.” The ₹2000 banknotes were introduced in November 2016 to meet the urgent currency requirements of the economy after the withdrawal of the legal tender status of ₹500 and ₹1000 banknotes. However, since banknotes in other denominations became readily available, the objective of introducing the ₹2000 banknotes has been fulfilled, leading to the discontinuation of their printing in 2018-19, according to the RBI.
Approximately 89% of the ₹2000 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 significantly declined from its peak of ₹6.73 lakh crore as of March 31, 2018 (37.3% of Notes in Circulation) to ₹3.62 lakh crore, constituting only 10.8% of Notes in Circulation as of March 31, 2023. Additionally, it has been observed that this denomination is not commonly used for transactions, while the stock of banknotes in other denominations remains sufficient to meet the currency requirements of the public.
Given these factors, the RBI has decided to withdraw the ₹2000 denomination banknotes from circulation while reiterating that they will continue to be legal tender.
This withdrawal follows a similar measure undertaken by the RBI in 2013-2014.
“ ₹2000 currency note will remain legal tender after 30th September too. RBI expects that 4 month time is enough for people to exchange notes with the banks. Most of the ₹2000 notes that are in circulation will return to banks within the given time frame of 30th September. This is a routine exercise of RBI and people need not panic,” ANI quoted people familiar with the matter.
How to exchange or deposit your ₹2000 notes
Individuals can deposit ₹2000 banknotes into their bank accounts or exchange them for banknotes of other denominations at any bank branch. Deposits can be made without restrictions and subject to existing instructions and applicable statutory provisions. Furthermore, individuals will have the option to exchange ₹2000 banknotes for other denominations up to a limit of ₹20,000 at a time at any bank, starting from May 23, 2023.
The facility for exchanging ₹2000 banknotes into other denominations will be available until September 30, 2023, at all banks. Additionally, from May 23, 2023, individuals can also avail themselves of the exchange facility at the 19 Regional Offices of the RBI having Issue Departments.