On May 19, 2023, the Reserve Bank of India (RBI) notified the withdrawal of Rs 2000 denomination banknotes from circulation and directed banks to stop issuing this banknote with immediate effect.
- As a result of this notification, the public needs to deposit and/or exchange Rs 2000 banknotes with bank branches or 19 Regional Offices (ROs) of RBI within 4 months i.e. from May 23, 2023, to, on or before September 30, 2023.
- The limit for the exchange facility is Rs 20,000 at a time to ensure operational convenience and prevent any disruption to the regular activities of bank branches.
Legal Tender Status will be continued:
While the Rs 2000 banknotes will no longer be issued or circulated after September 30, 2023, they will still be considered legal tender after this too.
- For transactions, the individuals can continue to use the Rs 2000 banknotes upto September 30, 2023, but are encouraged to exchange/deposit within the given time frame.
Reasons behind its Withdrawal:
i.Sufficient Supply of Alternatives: The stock of banknotes in other denominations is adequate to meet the currency requirement of the public.
ii.Concluding Timeframe: Approximately 89% of the Rs 2000 banknotes were put into circulation before March 2017. These banknotes are approaching the end of their projected lifespan of 4 to 5 years.
iii.Diminishing Circulation: The cumulative value of these banknotes in circulation has declined from Rs 6.73 lakh crore as on March 31, 2018 (37.3% of notes in Circulation) to Rs 3.62 lakh crore, as compared to on March 31, 2023, representing 10.8% of notes in Circulation.
- This means, that people are hoarding this high-value currency. So, the decision will help in curbing black money to a great extent.
iv.Clean Note Policy: This withdrawal is also in pursuance with RBI’s Clean Note Policy which ensures the availability of good quality banknotes to the public.
The Story of Rs 2000 Banknote:
Rs 2000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934, as an immediate relief to meet the currency requirement of the Indian economy amid the withdrawal of the legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time.
- Its intended objective was met as an adequate quantity of other denominations became available. Therefore, its printing was halted in 2018-19.
Note: The withdrawal of the Rs 2000 denomination is a routine exercise. A similar withdrawal of currency notes printed before 2005 was done by the Central Government in 2013-2014.
Additional info: The Magenta coloured Rs 2000 note was a part of the Mahatma Gandhi New Series of banknotes. The reverse side features a motif of the Mangalyaan, representing India’s first interplanetary space mission
Recent Related News:
i.On March 06, 2023, RBU launched the mission ‘Har Payment Digital’ as part of the Digital Payments Awareness Week (DPAW) to reinforce the ease and convenience of digital payments and facilitate onboarding of new consumers into the digital payment system.
ii.On 10th March 2023, the Reserve Bank of India (RBI) infused liquidity amounting to Rs 82,650 crore into the banking system through a 14-day Variable Rate Repo (VRR) auction. Under the VRR auction, Banks borrowed Rs 82,650 crore against the announced Rs 1 lakh crore (USD 12.19 billion)at a weighted average rate of 6.53%.
About Reserve Bank of India (RBI):
Governor– Shaktikanta Das
Deputy Governors– Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar
Establishment – 1st April 1935
Headquarters– Mumbai, Maharashtra
