The Reserve Bank of India (RBI) has decided to withdraw the ₹2000 denomination notes from circulation as they are "at the end of their estimated life-span of 4-5 years" and "not commonly used for transactions".
While the ₹2000 denomination notes will continue to be legal tender, the central bank has urged members of the public to deposit ₹2000 notes into their bank accounts or exchange them for banknotes of other denominations at any bank branch.
"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," the banking regulator says.
In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, the exchange of ₹2000 notes into other denominations can be made up to a limit of ₹20,000 at a time at any bank starting from May 23, 2023, the RBI says.
"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 banking regulator says, adding that separate guidelines have been issued to the banks.
The facility for the exchange of ₹2000 notes up to the limit of ₹20,000 at a time will also be provided at the 19 regional offices of RBI from May 23, 2023.
The RBI asked the general public to utilise the time up to September 30, 2023, to deposit or exchange the ₹2000 notes. It has also advised banks to stop issuing ₹2000 denomination banknotes with immediate effect.
The ₹2000 denomination banknote was introduced in November 2016, primarily to meet the currency requirement of the economy in an expeditious manner after demonetisation of all ₹500 and ₹1000 notes in circulation at that time.
The objective of introducing ₹2000 banknotes was met once banknotes in other denominations became available in adequate quantities, the RBI says, adding that printing of ₹2000 banknotes was stopped in 2018-19.
About 89% of the ₹2000 denomination banknotes were issued prior to March 2017. 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 as on March 31, 2023.
The stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public, assures the RBI.