The banknotes in Rs 2,000 denomination will continue to be legal tender till September 30, 2023; Here’s What You Need To Do Now
The Reserve Bank of India (RBI) on Friday said it has decided to withdraw Rs 2,000 banknotes from circulation and the notes will continue to be legal tender. Why has the RBI withdrawn the notes? Can you use these notes now? Here’s all that you need to know about the withdrawal of Rs 2,000 banknotes:
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Why Has the RBI Withdrawn Rs 2,000 Banknotes?
The RBI has decided to withdraw the Rs 2,000 denomination banknotes from circulation in pursuance of the ‘Clean Note Policy’ of the Reserve Bank of India.
The RBI also said “it has also been observed that this denomination (Rs 2,000 banknotes) 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.”
What Is Clean Note Policy?
The Reserve Bank of India introduced the Clean Note Policy to give the citizens good-quality currency notes and coins. Under this policy, the RBI also instructed the banks to issue only good-quality clean notes to the public and refrain from recycling the soiled notes received by them over their counters.
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How Circulation of Rs 2,000 Notes Declined In The Market?
According to the RBI data, about 89 per cent of the Rs 2,000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated lifespan of 4-5 years.
The total value of these banknotes in circulation has declined from Rs 6.73 lakh crore at its peak as on March 31, 2018, (37.3 per cent of notes in circulation) to Rs 3.62 lakh crore constituting only 10.8 per cent of notes in circulation on March 31, 2023.
Can You Use Rs 2,000 Notes Now?
The banknotes in Rs 2,000 denomination will continue to be legal tender till September 30, 2023. The RBI had undertaken a similar withdrawal of notes from circulation in 2013-14.
You may deposit Rs 2,000 banknotes into your bank accounts and/or exchange them into 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.
“Members of the public are encouraged to utilise the time up to September 30, 2023 to deposit and/or exchange the Rs 2,000 banknotes,” according to the RBI.
Where Can You Exchange Your Rs 2,000 Banknotes?
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 Rs 2,000 banknotes until September 30, 2023. Separate guidelines have been issued to the banks.
The facility for exchange of Rs 2,000 banknotes upto the limit of Rs 20,000 at a time shall also be provided at the 19 regional offices (ROs) of RBI having Issue Departments from May 23, 2023.
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What Do Experts Say?
Karthik Srinivasan, senior vice-president (financial sector ratings) of ICRA, said, “As witnessed during demonetisation, we expect the deposit accretion of banks could improve marginally in near term. This will ease the pressure on deposit rate hikes and could also result in moderation in short-term interest rates.”
Vimal Nadar, head of (research) at Colliers India, said, “The withdrawal of INR 2000 rupee-denominated notes is an expected and timely move towards prudent currency management within the realm of maintaining banking & financial discipline.”
He also said such measures further reduce/ eliminate the probable cash component in high-value real estate transactions. In the last few years, RERA & demonetisation have brought in significant levels of transparency in real estate, mainly contributing to fair market price determination.
The Rs 2,000 denomination banknote was introduced in November 2016 under Section 24(1) of the RBI Act, 1934, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of the legal tender status of all Rs 500 and Rs 1,000 banknotes in circulation at that time.
The objective of introducing Rs 2,000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, the printing of Rs 2,000 banknotes was stopped in 2018-19.
