RBI to withdraw Rs 2,000 currency notes, but to remain legal tender till Sept 30

BENGALURU: The Reserve Bank of India (RBI) on Friday said it will withdraw Rs 2,000 notes from circulation. However, it will continue as legal tender till September 30.

In a statement, RBI chief general manager Yogesh Dayal said the Rs 2000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of legal tender status of all Rs 500 and Rs 1,000 banknotes in circulation at that time. The objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, printing of Rs 2,000 banknotes was stopped in 2018- 19.

The statement said about 89 per cent of the Rs 2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated lifespan of 4-5 years. The total value of these banknotes in circulation has declined from Rs 6.73 lakh crore at its peak as on March 31, 2018 (37.3 pc of notes in circulation) to Rs 3.62 lakh crore constituting only 10.8 pc of notes in circulation on March 31, 2023. 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.

In view of the above, and in pursuance of the ‘Clean Note Policy’ of the Reserve Bank of India, it has been decided to withdraw the Rs 2000 denomination banknotes from circulation. They will continue to be legal tender. It may be noted that RBI had undertaken a similar withdrawal of notes from circulation in 2013-2014, the statement said.

Account holders may deposit Rs 2,000 banknotes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch. 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.

In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of Rs 2,000 banknotes into banknotes of other denominations can be made up to a limit of Rs 20,000 at a time at any bank starting from May 23, 2023, the statement said.

To complete the exercise in a time-bound manner and to provide adequate time to the members of public, all banks shall provide deposit and/or exchange facility for Rs 2,000 banknotes until September 30, 2023. Separate guidelines have been issued to the banks, it said. The facility for exchange of Rs 2,000 banknotes up to the limit of Rs 20,000 at a time shall also be provided at the 19 Regional Offices (ROs) of RBI having Issue Departments from May 2. The RBI has also advised banks to stop issuing Rs 2000 denomination banknotes with immediate effect, the statement said.