On Friday, the Reserve Bank of India removed ₹2,000 currency notes from circulation. The central bank has instructed banks to offer deposit and exchange services for ₹2,000 notes until September 30, 2023.
Following the implementation of demonetisation of ₹500 and ₹1,000 notes by the Modi government in November 2016, the ₹2,000 denomination bank note was introduced. However, according to the Reserve Bank of India (RBI), the purpose of introducing ₹2,000 notes was fulfilled once an adequate supply of banknotes in other denominations became available. Consequently, the printing of ₹2,000 banknotes was discontinued in 2018-2019. Furthermore, it is estimated that approximately 89 percent of the ₹2,000 notes issued prior to March 2017 have reached the end of their expected lifespan of 4-5 years. As a result, the total value of these banknotes in circulation has decreased from ₹6.73 lakh crore at its peak as of March 31, 2018 (representing 37.3 percent of Notes in Circulation) to ₹3.62 lakh crore, accounting for only 10.8 percent of Notes in Circulation as of March 31, 2023.
The Reserve Bank of India (RBI) has noted that the ₹2,000 denomination banknote is not widely utilized for transactions, and there is a sufficient supply of banknotes in other denominations to meet the currency needs of the public.
The decision to withdraw the ₹2,000 banknotes aligns with the ‘Clean Note Policy’ of the central bank. Individuals have the option to deposit their ₹2,000 banknotes into their bank accounts or exchange them for banknotes of different denominations at any bank branch. Deposits into bank accounts can be made without any restrictions, following the usual procedures outlined in existing instructions and relevant statutory provisions.
Starting from May 23, 2023, individuals can exchange ₹2,000 banknotes for banknotes of other denominations at any bank branch. However, there will be a limit of ₹20,000/- for each transaction.
