The Reserve Bank of India has issued a circular to banks today, asking them not to issue any more rupee notes of 2,000 denomination to customers. The RBI said it was beginning the process of withdrawing the 2,000-rupee notes from circulation.
The 2,000-rupee banknotes, the highest denomination Indian currency as of now, are still legal tender, but all of them must be deposited in bank accounts by September 30, 2023, or they can be exchanged with banknotes of other denominations at any bank.
These bright pink 2,000-rupee notes were issued in the aftermath of India’s unprecedented demonetisation in November-December 2016, whose purpose was, ostensibly, to both flush out black money and curb currency counterfeiting.
The RBI circular today said: “The ₹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 ₹500 and ₹1000 banknotes in circulation at that time.
“Therefore, printing of ₹2000 banknotes was stopped in 2018-19. About 89 per cent of the ₹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 ₹6.73 lakh crore at its peak as on March 31, 2018 (37.3 per cent of Notes in Circulation) to ₹3.62 lakh crore constituting only 10.8 per cent 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.”
The RBI circular said that the decision to withdraw the 2,000-rupee note was part of its “Clean Note Policy”. The central bank said: “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 ₹2000 banknotes into banknotes of other denominations can be made up to a limit of ₹20,000 at a time at any bank starting from May 23, 2023.
“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 ₹2000 banknotes until September 30, 2023.”
The RBI e-circular was signed by Yogesh Dayal, Chief General Manager.