- Saturday, March 01, 2025
However, unlike the November 2016 demonetisation move when the country’s old Rs 500 and Rs 1,000 notes were invalidated overnight, the Rs 2,000 notes will continue to be a legal tender till September 30.
By: India Weekly Staff
In a surprise move on Friday (12), the Reserve Bank of India (RBI) announced withdrawal of Rs 2,000 currency notes from circulation but gave public time till September 30 to either deposit such notes in accounts or exchange them at banks.
Unlike the November 2016 shock demonetisation move when the country’s old Rs 500 and Rs 1,000 notes were invalidated overnight, the Rs 2,000 notes will continue to be a legal tender till September 30.
The central bank, however, did not say what would be the status of 2,000 notes in private hands after September 30. Earlier, the government had made it an offence to hold the demonetised Rs 500 and 1,000 notes after expiry of the deposit deadlines.
Banks will exchange the Rs 2,000 notes till September 30 and people holding notes beyond the specified date will not invite legal action, sources said. In an interview to a news channel, finance secretary T V Somanathan said the decision is different from demonetisation of high-value currency notes of 2016 and will have no impact on the economy.
When asked on what will happen to the currency notes not deposited before September 30, he said banks will have a proper system to handle it.
Former finance secretary S C Garg said the latest move is aimed at reducing dependence on high-denomination currency notes and promote digital payments.
Half of the Rs 2,000 denomination notes issued as part of remonetisation were already withdrawn from the system and remaining will go out of system through today’s decision, Garg said.
As of March 2023, Rs 2,000 notes made up for almost 11 per cent of currency in circulation.
In a statement, the RBI said it has asked banks to stop issuing Rs 2,000 notes with immediate effect. While the RBI did not specify a limit for depositing the Rs 2,000 currency notes in bank accounts, exchange of a maximum of Rs 20,000 (10 notes of Rs 2,000) for other currency notes will be allowed at a time.
The move comes amid concerns of the highest denomination notes being used to hoard black money. The RBI had stopped printing Rs 2,000 notes in 2018-19 and the notes were rarely in circulation.
The Rs 2,000 denomination bank note was introduced in November 2016, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of legal tender status of all Rs 500 and Rs 1,000 bank notes in circulation at that time.
The RBI said it has also been observed that Rs 2,000 denomination note is not commonly used for transactions. Further, the stock of bank notes in other denominations continues to be adequate to meet the currency requirement of the public, it added. “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 Rs 2,000 denomination bank notes from circulation,” it said.
The bank notes in Rs 2,000 denomination will continue to be a legal tender, it added. The central bank has asked the public to deposit Rs 2,000 bank notes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch. “Members of the public are encouraged to utilise the time up to September 30, 2023 to deposit and/or exchange the Rs 2,000 bank notes,” the central bank said.
(PTI)
