Mumbai: The Reserve Bank of India (RBI) on Friday said that it has decided to withdraw the Rs 2000 denomination banknotes from circulation in line with its “Clean Note Policy.”
“The banknotes in Rs 2000 denomination will continue to be legal tender,” the central bank said in a press release.
The RBI said that the Rs 2000 denomination banknote was introduced in November 2016 primarily to meet the currency requirement of the economy in an expeditious manner after Rs 500 and Rs 1000 banknotes ceased to be legal tender.
It further said that the objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities.
As per the central bank, printing of Rs 2000 banknotes was stopped in 2018-19.
About 89% of the Rs 2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life-span 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 said that it has also been observed that the banknotes in Rs 2000 denomination are not commonly used for transactions. Further, the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public.”In view of the above, and in pursuance of the “Clean Note Policy” of the Reserve Bank of India, it has been decided to withdraw the Rs 2000 denomination banknotes from circulation,” the RBI said.
The RBI has asked the public to 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,” it said.The central bank said that in order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of Rs 2000 banknotes into banknotes of other denominations can be made upto a limit of Rs 20,000 at a time at any bank starting from May 23, 2023.
“To complete the exercise in a time-bound manner and to provide adequate time to the members of public, all banks shall provide deposit and/or exchange facility for Rs 2000 banknotes until September 30, 2023,” the RBI statement said.
The RBI has advised banks to stop issuing Rs 2000 denomination banknotes with immediate effect.
“Members of the public are encouraged to utilise the time up to September 30, 2023 to deposit and/or exchange the Rs 2000 banknotes,” it said.