Manas Dasgupta
NEW DELHI, May 19: The Reserve Bank of India on Friday decided to withdraw from circulation Rs 2,000 denomination bank notes with immediate effect under its “Clean Note Policy” to ensure availability of good quality banknotes to the members of public.
However, the ₹2,000 notes will continue to be legal tender but has advised the public to deposit ₹2,000 notes into their bank accounts and/or exchange them into banknotes of other denominations at any branch at the earliest. “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,” the RBI said.
In a reminder of the demonetisation days when the banking channel was overwhelmed by the massive crowd thronging into the branches to exchange banknotes, the decision to withdraw ₹2,000 notes is also likely to strain the system besides creating anxiety and inconvenience to the public.
For operational convenience and to avoid disruption of regular activities of banks, exchange of ₹2,000 notes into banknotes of other denominations can be made up to a limit of ₹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 have been directed to provide deposit and/or exchange facility for ₹2,000 notes till September 30, 2023.
The RBI has issued separate guidelines to the banks. The facility for exchange of ₹2,000 notes up to the limit of ₹20,000 at a time will also be available at the 19 Regional Offices of the RBI having “Issue Departments” from May 23, 2023. Banks have been asked to stop issuing ₹2,000 notes with immediate effect. “Members of the public are encouraged to utilise the time up to September 30, 2023 to deposit and/or exchange the ₹2,000 notes,” the RBI statement added.
The ₹2,000 banknote was introduced in November 2016 “primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of legal tender status of all ₹500 and ₹1,000 banknotes in circulation at that time,” the banking regulator said.
“The objective of introducing ₹2,000 notes was met once banknotes in other denominations became available in adequate quantities.” The printing of ₹2,000 notes was stopped in 2018-19. The RBI said about 89% of the ₹2,000 notes 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 ₹6.73 lakh crore at its peak as on March 31, 2018 [37.3% of notes in circulation] to ₹3.62 lakh crore, constituting only 10.8% of notes in circulation on March 31, 2023,” the RBI said
“It has also been observed that this denomination is 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,” the central bank added. Banks have been instructed to make arrangements to reduce inconvenience to the senior citizens, persons with disabilities, etc., seeking to exchange/deposit ₹2000 banknotes.