The Reserve Bank of India has decided to withdraw Rs 2,000 denomination banknotes from circulation and asked everyone to exchange them by September 30, 2023. The Rs 2,000 notes, however, will continue to be legal tender.
Key points
- According to the RBI, the Rs 2000 denomination banknote was introduced in November 2016 primarily with the objective to meet the currency requirement of the economy in an expeditious manner after withdrawal of the legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time.
- The RBI has observed that this denomination is not commonly used for transactions.
- Further, the stock of banknotes in other denominations continue to be adequate to meet the currency requirement of the public.
- In view of the above, and in pursuance of the “Clean Note Policy,” the central bank decided to withdraw the Rs 2000 denomination banknotes from circulation.
- The new Rs 500 and Rs 2,000 notes were introduced in November 2016 under Section 24 (1) of the RBI Act of 1934. By 2018-19, the central bank had already printed new Rs 2,000 notes.
- Members of the public may approach bank branches for deposit and/or exchange of Rs 2000 banknotes held by them.
- The facility for deposit into accounts and exchange for Rs 2000 banknotes will be available at all banks starting on May 23, 2023 until September 30, 2023. However, at a time, one can only exchange Rs 2000 banknotes upto to a limit of Rs 20,000 – 10 banknotes at a time.
- Deposit into accounts can be made without restrictions.
- The Rs 2000 banknotes can be deposited into bank accounts and cash requirements can be drawn thereafter, against these deposits.
- Even non-account holders can exchange Rs 2000 banknotes up to a limit of Rs 20,000/– at a time at any bank branch.
- The Rs 2000 banknote will continue to maintain its legal tender status.
- Members of the public can continue to use Rs 2000 banknotes for their transactions and also receive them in payment.
- Approximately 89% of the Rs. 2000 banknotes were issued before March 2017 and are nearing the end of their estimated lifespan of 4-5 years.
- The total value of these banknotes in circulation has significantly declined from its peak of Rs. 6.73 lakh crore as of March 31, 2018 (37.3% of Notes in Circulation) to Rs. 3.62 lakh crore, constituting only 10.8% of Notes in Circulation as of March 31, 2023.
Clean Note Policy
- The “Clean Note Policy” is adopted by RBI to ensure availability of good quality banknotes to the members of public.
- To achieve this, the apex bank has installed high-speed Currency Verification and Processing Systems (CVPS) machines at all its offices that deal with currency.
- These machines could process 50,000-60,000 notes per hour, and old notes were shredded and compacted. This policy was first announced in 1999.
- In October 2018, the new clean note policy was introduced in order to make digital payments more secure.
