RBI withdraws ₹2,000 notes
The Reserve Bank of India (RBI) has announced that it will be withdrawing the ₹2,000 banknotes from circulation. People will have the option to exchange or deposit these notes in their bank accounts until September 30. Beginning on May 23, the RBI’s regional offices and other banks will start accepting ₹2,000 notes in exchange for lower denomination ones. It is important to note that the ₹2,000 notes will continue to be legal tender.
The RBI has instructed all banks to cease issuing ₹2,000 notes immediately. These notes were first introduced in November 2016 when Prime Minister Narendra Modi invalidated the high-value ₹1,000 and ₹500 notes overnight. The objective behind the introduction of ₹2,000 banknotes was achieved once an adequate quantity of banknotes in other denominations became available. As a result, the printing of ₹2,000 banknotes was discontinued in 2018-19, according to the RBI’s statement.
To ensure convenience and avoid disruptions at bank branches, the RBI has set a limit of ₹20,000 for exchanging ₹2,000 banknotes with banknotes of other denominations. Individuals will be able to make such exchanges starting from May 23, 2023. People can continue to deposit or exchange their ₹2,000 notes until September 30, with the possibility of the deadline being extended if necessary. However, even after the deadline, ₹2,000 notes will still retain their status as valid tender.
The RBI stated that approximately 89% of the ₹2,000 denomination banknotes were issued before March 2017 and have reached the end of their estimated lifespan of four to five years. The value of these banknotes in circulation has decreased from ₹6.73 lakh crore at its peak on March 31, 2018 (representing 37.3% of the notes in circulation) to ₹3.62 lakh crore, accounting for only 10.8% of the notes in circulation as of March 31, 2023.
The central bank clarified that ₹2,000 notes are not commonly used for transactions. A similar withdrawal of notes from circulation had been carried out by the RBI in 2013-2014.
