Reserve Bank of India (RBI) has announced withdrawal of ₹2,000 denomination banknote from circulation. The currency will continue to remain a legal tender before it is phased out in a time-bound manner.
“To complete the exercise in a time-bound manner and to provide adequate time to the members of the public, all banks shall provide deposit and/or exchange facility for ₹2,000 banknotes until September 30, 2023,” RBI said in a release.
“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,” the release said.
The ₹2,000 denomination banknote was introduced in November 2016 to meet the currency requirement of the economy post demonetisation wherein the government withdrew the legal tender status of all ₹500 and ₹1,000 banknotes in circulation at that time.
“The objective of introducing ₹2,000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, the printing of ₹2,000 banknotes was stopped in 2018-19. About 89% of the ₹2,000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years,” RBI release said.
“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% of Notes in Circulation) to ₹3.62 lakh crore constituting only 10.8% of notes in circulation on March 31, 2023, according to the banking regulator. “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. In view of the above, and in pursuance of the “Clean Note Policy” of the Reserve Bank of India, it has been decided to withdraw the ₹2,000 denomination banknotes from circulation. The banknotes in ₹2,000 denomination will continue to be legal tender,” said the release.