RBI Withdraws Rs 2,000 Currency Note from Circulation: Here’s What You Need to Know
The Reserve Bank of India (RBI) has announced that it will withdraw the Rs 2,000 currency note from circulation, effective immediately. The decision is in line with the bank's ‘Clean Note Policy', which aims to ensure the availability of good quality banknotes for the public.[0] The Rs 2,000 banknotes were introduced to meet the currency requirement of the economy after the legal tender of Rs 500 and Rs 1,000 banknotes were withdrawn in November 2016. However, since that objective has been fulfilled, the RBI stopped printing Rs 2,000 banknotes in 2018-19.[0]
Individuals have the option to either submit their paper money at their respective bank branch or swap the notes for different denominations at any RBI regional office or bank branch.[1] The maximum limit for such swaps is Rs 20,000 per transaction.[1] The central bank has set a deadline of September 30 for deposit or exchange of Rs 2,000 notes at banks.[0]
According to the RBI, about 89% of the Rs 2,000 denomination notes were issued prior to March 2017 and are at the end of their estimated life span of four-five years.[2] This has led to the total value of ₹2,000 notes in circulation falling from ₹6.57 trillion in March 2017 to ₹3.62 trillion in March 2023.[3] As a result, the RBI has decided to gradually phase out the notes.
However, the Rs 2,000 notes will remain legal tender until September 30.[4] RBI Governor Shaktikanta Das has said that the impact of the withdrawal of Rs 2,000 currency notes will be “very very marginal” on the economy because it accounts for only 10.8% of currency in circulation.[5]
Customers can exchange up to 10 Rs 2,000 banknotes in one go and do not need to submit any identity proof at the time of exchange. The RBI has said that the public can exchange banknotes of Rs 2,000 up to a limit of Rs 20,000 at a time. If a person is holding more than 10 pieces of Rs 2,000 notes, they will be able to exchange them on different days as the exchange is not being recorded.[6]
Despite the recent increase in gold prices, the withdrawal of ₹2,000 notes has not significantly impacted gold sales in Mumbai's Zaveri Bazaar.[7] Jewellers believe that the impact has been less this time because people have shifted towards digital payment methods since 2016, with only about 10% of their transactions being made in cash.[7]
Going forward, a decision on the legal tender status of Rs 2,000 notes will be taken by the central bank only after an assessment post the September 30 deadline.[8]
0. “How many Rs 2,000 notes can you return to banks? What is the maximum limit?” Business Today, 22 May. 2023, https://www.businesstoday.in/latest/economy/story/how-many-rs-2000-notes-can-you-return-to-banks-what-is-the-maximum-limit-382215-2023-05-22
1. “You May Have To Go To RBI To Exchange Rs 2,000 Notes After Sept. 30 — BQ Exclusive” BQ Prime, 23 May. 2023, https://www.bqprime.com/business/you-may-have-to-go-to-rbi-to-exchange-rs-2000-notes-after-sept-30-bq-exclusive
2. “The ripples from the withdrawal of Rs 2,000 notes” Deccan Herald, 21 May. 2023, https://www.deccanherald.com/business/business-news/the-ripples-from-the-withdrawal-of-rs-2000-notes-1220785.html
3. “The withdrawal of ₹2,000 notes is short of a rational explanation | Mint” Mint, 23 May. 2023, https://www.livemint.com/opinion/columns/rbi-withdraws-2-000-notes-from-circulation-a-move-that-raises-more-questions-than-answers-11684867768864.html
4. “₹2,000 banknote-swap process from today; what you should know” Hindustan Times, 23 May. 2023, https://www.hindustantimes.com/business/rs-2-000-banknote-swap-rbi-guideline-things-to-know-101684814673554.html
5. “Impact of Rs 2,000 notes withdrawal ‘very very marginal’ on economy: RBI Governor” The Tribune India, 22 May. 2023, https://www.tribuneindia.com/news/nation/decision-to-withdraw-rs-2-000-notes-part-of-currency-management-operations-rbi-510220
6. “Exchanging Rs 2000 notes? No ID proof or form required, says SBI” The Indian Express, 21 May. 2023, https://indianexpress.com/article/india/sbi-rs-2000-exchange-bank-8621170/
7. “Gold Rush Due To ₹ 2,000 Notes Withdrawal?..” Greatandhra, 22 May. 2023, https://www.greatandhra.com/politics/gossip/gold-rush-due-to-2000-notes-withdrawal-129421
8. “Rs 2,000 status: From withdrawal to exchange by September 30 to ‘we will see’” India Today, 22 May. 2023, https://www.indiatoday.in/business/story/rs-2000-notes-withdrawn-rbi-governor-shaktikanta-das-what-happens-after-september-30-deadline-2382582-2023-05-22
