Authors
Kushel HM is a mechanical engineer-turned-journalist, who loves all things football, tennis and films. He was with the news desk at the Hindustan Times, Mumbai, before joining Newschecker.
Close to seven years after it was introduced in November 2016 under Section 24(1) of the RBI Act, 1934, the RBI on May 19, 2023, decided to withdraw the ₹2,000 denomination banknotes from circulation. However, the existing notes will continue to be legal tender, the RBI said.
The notes were introduced primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of legal tender status of all ₹500 and ₹1000 banknotes in circulation at that time, according to the RBI’s press release.
“The objective of introducing ₹2000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, printing of ₹2000 banknotes was stopped in 2018-19,” stated the release.
The ‘Clean Note Policy’
The RBI issued the majority (89%) of the ₹2000 denomination notes prior to March 2017; these notes are now at the end of their estimated lifespan of 4-5 years. This denomination is no longer commonly used for transactions. Also, there is adequate stock of banknotes in other denominations to meet currency requirements.
“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 ₹2000 denomination banknotes from circulation,” the RBI said.
The clean note policy was reportedly adopted by the RBI to ensure the availability of good quality banknotes to the public. The policy aims to maintain the integrity of the Indian currency by removing damaged, counterfeit, or soiled notes from circulation.
According to an India Today report, banks and financial institutions, under the clean note policy, are required to withdraw unfit or damaged notes from circulation and replace them with new ones. The RBI regularly monitors the quality of currency notes in circulation and sets standards for their acceptability.
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Get them exchanged from May 23 to September 30, 2023
The ₹2000 banknote will continue to maintain its legal tender status, the RBI has said in the FAQ section on its website. Members of the public can continue to use ₹2000 banknotes for their transactions and receive them in payment. However, they are encouraged to deposit and/or exchange these banknotes on or before September 30, 2023, stated the RBI, adding that members of the public can exchange ₹2000 banknotes up to a limit of ₹20,000 at a time at any bank branch from May 23.
The RBI’s announcement on Friday saw several social media users terming it “Demonetisation 2.0”, although there are clear differences from the shock move on November 8, 2016, that rendered the old ₹500 and ₹1,000 notes invalid overnight.
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‘Don’t Panic, Just Part Of Currency Management,’ Assures RBI Governor
Further clarifying the RBI’s move and assuring the public not to worry, RBI Governor Shaktikanta Das said the withdrawal of ₹2,000 denomination banknotes is just part of currency management. He underlined that the ₹2,000 note will continue to be legal tender and with people having a four-month window to deposit the notes, there is no reason to rush to banks immediately, while pointing out that the September 30 deadline has been announced so that people take it seriously.
The impact of the withdrawal on the economy will be “very very marginal”, he said, adding ₹2,000 notes made up for just 10.8 percent of the total currency in circulation.
Sources
RBI press release
India Today report, May 19, 2023
Indian Express report, May 22, 2023
NDTV report, May 22, 2023
MyGovIndia tweet, May 21, 2023
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Authors
Kushel HM is a mechanical engineer-turned-journalist, who loves all things football, tennis and films. He was with the news desk at the Hindustan Times, Mumbai, before joining Newschecker.
