New Delhi, 19 May (MTNews): The Reserve Bank of India has decided to withdraw Rs 2000 currency notes from circulation. However, the bank notes will continue to be a legal tender, RBI said in a statement on Monday.
RBI asked the notes to be exchanged at banks on or before September 30, 2023.
“Members of the public can continue to use Rs 2,000 banknotes for their transactions and also receive them in payment. However, they are encouraged to deposit and/or exchange these notes on or before September 30, 2023,” said RBI adding that the exchange facility for Rs 2,000 currency notes will start from May 23, 2023.
According to the RBI, the rationale behind the move is because “banknotes in other denominations are available in adequate quantities.”
As per the RBI release, about 89% of the Rs 2,000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life-span 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% of notes in circulation) to Rs 3.62 lakh crore constituting only 10.8% of notes in circulation on March 31, 2023. It has also been observed that this denomination 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,” RBI stated.
Meanwhile, government sources were quoted by ANI saying, “Rs 2,000 currency note will remain legal tender after September 30 too. RBI expects that four-month time is enough for people to exchange notes with the banks. Most of the Rs 2,000 notes that are in circulation will return to banks within the given time frame of September 30. This is a routine exercise of the RBI and people need not panic.”
The Rs 2,000 denomination banknote was introduced in November 2016, 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.
“In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of Rs 2,000 banknotes into banknotes of other denominations can be made up to a limit of Rs 20,000 at a time at any bank starting from May 23, 2023,” RBI said.
RBI explains why Rs 2000 denomination was withdrawn
1. Why are Rs 2000 denomination banknotes being withdrawn?
The Rs 2000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934 primarily with the objective to meet the currency requirement of the economy in an expeditious manner after withdrawal of the legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time. With fulfilment of that objective and availability of banknotes in other denominations in adequate quantities, printing of Rs 2000 banknotes was stopped in 2018-19. A majority of the Rs 2000 denomination notes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years. It has also been observed that this denomination 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.
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 2000 denomination banknotes from circulation.
2. What is a Clean Note Policy?
It is a policy adopted by RBI to ensure availability of good quality banknotes to the members of the public.
3. Does the legal tender status of Rs 2000 banknotes remain?
Yes. The Rs 2000 banknote will continue to maintain its legal tender status .
4. Can Rs 2000 banknotes be used for normal transactions?
Yes. Members of the public can continue to use Rs 2000 banknotes for their transactions and also receive them in payment. However, they are encouraged to deposit and/or exchange these banknotes on or before September 30, 2023.
5. What should the public do with the Rs 2000 denomination banknotes held by them?
Members of the public may approach bank branches for deposit and/or exchange of Rs 2000 banknotes will be available at all banks until September 30, 2023. The facility for exchange will be available also at the 19 Regional Offices (ROs) of RBI having Issue Departments1 until September 30, 2023.
6. Is there a limit on deposit of Rs 2000 banknotes into a bank account?
Deposit into bank accounts can be made without restrictions subject to compliance with extant Know Your Customer (KYC) norms and other applicable statutory / regulatory requirements.
7. Is there an operational limit on the amount of Rs 2000 banknotes that can be exchanged?
Members of the public can exchange Rs 2000 banknotes upto to a limit of Rs 20,000/- at a time.
8. Can Rs 2000 banknotes be exchanged through Business Correspondents (BCs)?
Yes, exchange of Rs 2000 banknotes can be made through BCs upto a limit of Rs 4000/- per day for an account holder.
9. From which date will the exchange facility be available?
To give time to the banks to make preparatory arrangements, members of the public are requested to approach the bank branches or ROs of RBI from May 23, 2023 for availing exchange facility.
10. Is it necessary to be a customer of the bank to exchange Rs 2000 banknotes from its branches?
No. A non-account holder also can exchange Rs 2000 banknotes up to a limit of Rs 20,000/- at a time at any bank branch.
11. What if someone needs more than Rs 20,000/- cash for business or other purposes?
Deposit into accounts can be made without restrictions. The Rs 2000 banknotes can be deposited into bank accounts and cash requirements can be drawn thereafter, against these deposits.
12. Is there any fee to be paid for the exchange facility?
No. The exchange facility shall be provided free of cost.
13. Will there be special arrangements for senior citizens, persons with disabilities, etc. for exchange and deposit?
Banks have been instructed to make arrangements to reduce inconvenience to the senior citizens, persons with disabilities, etc., seeking to exchange/deposit Rs 2000 banknotes.
14. What will happen if one cannot deposit / exchange Rs 2000 banknotes immediately?
To make the entire process smooth and convenient for the public, a period of over four months has been given for deposit and/or exchange of `2000 banknotes. Members of the public are therefore encouraged to avail this facility at their convenience within the allotted time.
15. What will happen if a bank refuses to exchange / accept deposits of Rs 2000 banknotes?
For redress of grievance in case of deficiency of service, the complainant / aggrieved customer may first approach the concerned bank. If the bank does not respond within a period of 30 days after lodging of the complaint or if the complainant is not satisfied with the response/resolution given by the bank, the complainant can lodge the complaint under the Reserve Bank – Integrated Ombudsman Scheme (RB-IOS), 2021 at the Complaint Management System portal of RBI (cms.rbi.org.in).