RBI pulls out ₹2k notes from circulation, to continue as legal tender

New Delhi : The Reserve Bank of India has decided to withdraw ₹2,000 banknotes from circulation and has requested all citizens to replace them by September 30, 2023. However, ₹2,000 notes will remain legal tender.

In a statement issued on Friday, the Reserve Bank of India stated: In accordance with the Reserve Bank of India’s Clean Note Policy, it has been decided to withdraw the ₹2,000 denomination banknotes from circulation. The banknotes in the denomination of ₹2,000 will remain legal tender. To finish the exercise on schedule and provide the public enough time, all institutions must provide a deposit and/or exchange facility for ₹2,000 banknotes until September 30, 2023.

Approximately 89% of the ₹2,000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years, the RBI explained. The entire value of these banknotes in circulation has fallen from ₹6.73 lakh crore on March 31, 2018 (37.3% of Notes in Circulation) to ₹3.62 lakh crore on March 31, 2023, totaling just 10.8% of Notes in Circulation. This denomination has likewise been noted to be infrequently used for transactions. Furthermore, the supply of banknotes of various denominations remains enough to fulfill the public’s financial needs.

Members of the general public may deposit ₹2,000 banknotes into their bank accounts or swap them for banknotes of other denominations at any bank branch, according to the RBI. Deposits 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 stated.

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 any bank beginning May 23, 2023, the central bank noted.

Additionally, beginning May 23, the RBI’s 19 Regional Offices with issuing departments will provide the ability to swap ₹2,000 bank notes up to a ceiling of ₹20,000 at a time.

Following the demonetisation of the ₹1,000 and ₹500 banknotes in November 2016, the ₹2,000 denomination currency note was launched. The RBI stated that the goal of launching the ₹2,000 banknotes was reached after currency in other denominations became accessible in sufficient numbers. As a result, production of ₹2,000 banknotes has already ceased in 2018-19.

According to the Annual Reports of the Reserve Bank of India (RBI) submitted to Parliament in March by Finance Minister Nirmala Sitharaman, the total value of ₹500 and ₹2,000 denomination bank notes in circulation as of end-March 2017 and as of end-March 2022 was ₹ 9.512 lakh crore and ₹27.057 lakh crore, respectively.

There have been no instructions given to banks about not filling ₹2,000 notes in ATMs. Banks determine the quantity and denominational requirements for ATMs based on previous usage, customer demand, seasonal trends, and so on, she had explained earlier.

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