PIB’s fact-checking arm dispels reports of phasing out of ₹500 banknotes

The fact-checking arm of the Press Information Bureau (PIB) has dispelled reports claiming that the government is mulling phasing out ₹500 banknotes, it said in a post on X on Tuesday. 

“A YouTube video on the YT Channel 'CAPITAL TV' (capitaltvind) falsely claims that the RBI will discontinue the circulation of ₹500 notes by March 2026,” contextualised PIB Fact Check, before clarifying that no such announcement has been made by the Reserve Bank of India (RBI). “₹500 notes have not been discontinued and continue to remain legal tender,” it added.

The YouTube channel, citing sources familiar with the matter, claimed that the government is planning to demonetise the ₹500 banknotes by March 2026, and also claimed that the government has already stopped the printing of the banknotes, and eventually, it will demonetise the banknotes by March 2026. 

This claim comes days after Andhra Pradesh chief minister Chandrababu Naidu urged the government to cancel the legal tender of ₹500 and higher banknotes to curb corruption and ensure transparency in financial transactions.

“Today, from this Sabha, I want to once again request that this is the world of digital currency. If someone had to give a donation for party activities, then we had to go through a list, but now, just by scanning a QR code, cadres and the public can access giving donations. There is no need for the distribution of ₹500, ₹1,000, and ₹2,000 notes,” Naidu said, addressing his party workers at the Telugu Desam Party’s annual Mahanadu Sabha.

₹500 remains the highest denomination of banknotes in circulation, after the RBI announced in May 2023 that it would be withdrawing the ₹2000 banknote, the highest banknote in circulation at the time, and which was introduced when the government demonetised the ₹500 and ₹1000 banknotes in November 2016.

RBI said on Monday that two years after the announcement, 98.26% of the ₹2000 banknotes in circulation have been returned. The total value of ₹2,000 banknotes in circulation has fallen from ₹3.56 lakh crore in May 2023 to ₹6,181 crore as of May 31 of this year.

The decision to withdraw the ₹2000 banknotes from circulation was to dissuade the use of larger banknotes for transactions and incentivise the use of digital payments. With 98.26% of the banknotes now returned, the exercise of withdrawing ₹2000 banknotes is nearing completion.