The Reserve Bank of India (RBI) has decided to withdraw Rs 2,000 denomination banknotes from circulation. However, the notes will continue as legal tender, the circular of RBI said on Friday.
The RBI has advised banks to stop issuing Rs 2,000 denomination banknotes with immediate effect. In a circular, the central bank said that all Rs 2,000 currency notes must be exchanged before September 30, 2023.
All banks have been asked to provide deposit or exchange facilities for Rs 2,000 banknotes till September 30. However, the Rs 2,000 notes will remain legal tender.
The central bank also said in order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of Rs 2,000 notes into notes of other denominations can be made upto a limit of Rs 20,000 at a time at any branch starting from May 23.
According to the RBI, the objective of introducing the Rs 2,000 banknotes was met once currency in other denominations became available in adequate quantities. As such, the printing of Rs 2,000 banknotes was stopped in 2018-19.
The RBI said about 89% of the Rs 2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life-span 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% of Notes in Circulation) to Rs 3.62 lakh crore constituting only 10.8% 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.
