The Reserve Bank of India on Friday announced the withdrawal of Rs. 2000 notes from circulation. In a circular issued on the 19th of May, the RBI fixed the 30th of September as a deadline for people to deposit or exchange the notes in their possession.
The sudden announcement, which feels like 2016 demonetization created panic amongst people in India, especially businessmen. However, the decision is no result of the Government’s demonetisation situation or black money perspective.
Here are facts about why RBI decided to withdraw Rs. 2,000 notes from circulation:
- The printing of Rs 2000 banknotes was stopped in 2018-19 itself. The Reserve Bank has advised all banks to stop issuing Rs 2000 denomination banknotes with immediate effect.
- Rs 2000 note was introduced in November 2016 primarily to meet the currency requirement of the economy after the withdrawal of legal tender status of Rs 500 and Rs 1000 banknotes in circulation at that time. That objective has been met as banknotes in other denominations are now available in adequate quantities.
- About 89% of the Rs 2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years.
- RBI observed that Rs 2000 notes are not commonly used for transactions.
- The total value of Rs 2000 banknotes in circulation declined from Rs 6.73 lakh crore at its peak as on March 31, 2018 – 37.3% of Notes in Circulation – to Rs 3.62 lakh crore constituting only 10.8% of Notes in Circulation on March 31, 2023.
- The decision has been taken in pursuance of RBI’s “Clean Note Policy”
Meanwhile, people across India are advised to get their notes exchanged at banks by the 30th of September. Moreover, at a time only Rs. 20,000 are allowed for exchange.
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