India's central bank to withdraw Rs2,000 currency note from circulation

The Reserve Bank of India on Friday withdrew Rs2,000 currency notes from circulation. The central bank has asked banks to provide deposit and exchange facilities for Rs2,000 notes until 30 September of this year.

The Rs2,000 denomination banknote was introduced in November 2016 after the Modi government had introduced the demonetisation of Rs500 and Rs1,000 notes. As per RBI, the objective of introducing Rs2,000 notes was met once banknotes in other denominations became available in adequate quantities.

The RBI had stopped the printing of Rs2,000 banknotes in 2018-2019. Also, about 89 per cent of the Rs2,000 denomination notes issued before March 2017 are said to be at the end of their estimated lifespan of 4-5 years.

The total value of these banknotes in circulation has declined from Rs6.73 lakh crore at its peak of 31 March, 2018 (37.3% of Notes in Circulation) to Rs3.62 lakh crore constituting only 10.8% of Notes in Circulation on 31 March, 2023.

The RBI observed that the Rs2,000 denomination is not commonly used for transactions and the stock of other denomination notes is adequate to meet the currency requirement of people.

The decision was taken as per the 'Clean Note Policy' of the central bank. The people may deposit Rs2000 banknotes into their bank accounts and/or exchange them for banknotes of other denominations at any bank branch. Deposit into bank accounts can be made in the usual manner, that is, without restrictions and subject to extant instructions and other applicable statutory provisions.

The exchange of Rs2,000 banknotes into banknotes of other denominations can be made up to a limit of Rs20,000/- at a time at any bank starting from 23 May.