The Reserve Bank of India (RBI) has recently announced the withdrawal of the ₹2000 denomination banknotes from circulation. This decision aligns with the “Clean Note Policy” of the RBI and aims to streamline the currency requirements of the economy. Here are the key details regarding the withdrawal of ₹2000 banknotes.
Background
The ₹2000 banknote was introduced in November 2016 under Section 24(1) of the RBI Act, 1934, as a swift solution to meet the currency demand following the withdrawal of ₹500 and ₹1000 banknotes. However, with the availability of banknotes in other denominations in sufficient quantities, the objective of introducing the ₹2000 banknotes was fulfilled, and its printing was stopped in 2018-19.
Declining Circulation and Usage
Approximately 89% of the ₹2000 denomination banknotes were issued before March 2017 and are now reaching the end of their estimated life span of 4-5 years. The total value of these banknotes in circulation has decreased from ₹6.73 lakh crore (37.3% of Notes in Circulation) as of March 31, 2018, to ₹3.62 lakh crore, accounting for only 10.8% of Notes in Circulation by March 31, 2023. Moreover, it has been observed that the ₹2000 denomination is not commonly used for transactions. Meanwhile, there is an adequate stock of banknotes in other denominations to meet the public’s currency requirements.
Withdrawal Decision and Legal Tender Status
Considering the above factors and in line with the “Clean Note Policy,” the RBI has decided to withdraw the ₹2000 denomination banknotes from circulation. However, it is important to note that these banknotes will continue to be legal tender.
Deposit and Exchange Process
To facilitate a smooth transition, members of the public can deposit ₹2000 banknotes into their bank accounts or exchange them for banknotes of other denominations at any bank branch. The deposit process follows the usual manner without restrictions and is subject to existing instructions and statutory provisions.
Exchange Limit and Timeframe
To ensure operational convenience and avoid disruptions, the exchange of ₹2000 banknotes for banknotes of other denominations can be done up to a limit of ₹20,000/- at a time, starting from May 23, 2023, at any bank branch. All banks have been instructed to provide deposit and/or exchange facilities for ₹2000 banknotes until September 30, 2023.
Additional Exchange Facility
Apart from bank branches, the facility for exchanging ₹2000 banknotes up to the limit of ₹20,000/- at a time will also be available at the 19 Regional Offices (ROs) of RBI having Issue Departments, starting from May 23, 2023.
Ceasing Issuance
The RBI has directed banks to immediately stop issuing ₹2000 denomination banknotes. Members of the public are encouraged to utilize the period until September 30, 2023, to deposit and/or exchange their ₹2000 banknotes. The RBI has published a document of Frequently Asked Questions (FAQs) on its website for the convenience and information of the public.
Conclusion
The withdrawal of ₹2000 denomination banknotes is a strategic move by the RBI to optimize currency circulation and streamline the use of banknotes. The public is advised to adhere to the guidelines provided by banks and take advantage of the designated timeframe to complete the deposit and/or exchange process for ₹2000 banknotes.
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RBI Announces Withdrawal of ₹2000 Denomination Banknotes – FAQs
Q1: Why is the RBI withdrawing ₹2000 denomination banknotes?
Q2: When were the ₹2000 banknotes introduced, and why?
Q3: What is the current status of ₹2000 banknotes in circulation?
