India’s central bank, the Reserve Bank of India, on Friday said that it is withdrawing the currency note of Rs 2000 denomination from circulation. The Rs 2000 currency note had been introduced in November 2016 after Prime Minister Narendra Modi-led government had demonetised the old Rs 1,000 and Rs 500 notes in its crusade against black money. It was introduced primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of legal tender status of all Rs500 and Rs1000 banknotes in circulation at that time.
The objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities and therefore, printing of ₹2000 banknotes was stopped in 2018-19, the RBI said in a press statement.
The central bank said that Rs 2,000 notes continue to remain legal tender, and added that they can either be deposited in bank accounts or exchanged by September 30, 2023. It also asked banks to provide deposit and/or exchange facilities for Rs 2,000 notes until the specified date.
“The exchange facility for Rs 2,000 bank notes up to Rs 20,000 at a time would be available from May 23,” the RBI said in a statement, advising the banks to stop issuing Rs 2,000 denomination banknotes with immediate effect.
India: Reserve Bank of India to withdraw ₹2000 notes from circulation
The facility for the exchange of Rs 2,000 notes up to the limit of Rs 20,000 at a time will also be provided at the 19 Regional Offices (ROs) of the RBI having issue departments from May 23, said a press release issued by India’s central bank.
“The exchange facility for Rs 2,000 banknotes up to Rs 20,000 at a time would be available from May 23,” the RBI said in a statement, advising the banks to stop issuing Rs 2,000 denomination banknotes with immediate effect.
The Rs 2,000 note was the highest denomination available in the Indian currency.
In order to ensure operational convenience, and to avoid disruption of regular functioning of bank branches, exchange of Rs2000 banknotes with notes of other denominations can be made up to a limit of Rs20,000 at a time at any bank starting from May 23, 2023.
Rs 2,000 currency note’s circulation had been dipping
The 2,000 banknotes had been dwindling in circulation for the past few years. According to the finance ministry’s report tabled in Parliament in December 2022, the notes of Rs 2000 denomination in terms of value to the total notes in circulation dipped from 22.6 per cent (March 31, 2020) to 13.8 per cent at the end of March 31, 2022.
In a written reply, Finance Minister Nirmala Sitharaman had said the share of Rs 500 denomination banknotes, in terms of total value in circulation increased from 29.7 per cent at the end of March 31, 2000, to 73.3 per cent at the end of March 31, 2022.
The RBI in its annual report in May had also noted a similar trend, saying, “At the end of March 2020, the number of Rs 2000 denomination notes in circulation stood at 274 million, accounting for 2.4 per cent of the total number of currency notes in circulation. The count declined to 245 million or 2 per cent of the total banknotes in circulation as of March 2021 and further fell to 214 million or 1.6 per cent at the end of last fiscal year.”
The currency in circulation includes banknotes and coins. Presently, the Reserve Bank of India (RBI) issues banknotes in denominations of Rs 2, Rs 5, Rs 10, Rs 20, Rs 50, Rs 100, Rs 200, Rs 500, and Rs 2000. Coins in circulation comprise 50 paise and Re 1, Rs 2, Rs 5, Rs 10, and Rs 20 denominations.