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Rs 2,000 denomination notes withdrawn from circulation; remain legal tender, says RBI

Rs 2,000 denomination notes withdrawn from circulation; remain legal tender, says RBI
In an announcement on Friday, the Reserve Bank of India (RBI) revealed its decision to withdraw Rs 2,000 denomination currency notes from circulation.

Despite the withdrawal, the Rs 2,000 banknotes will continue to retain their status as legal tender. Individuals in possession of these banknotes can deposit them into their bank accounts or exchange them for banknotes of other denominations at any bank branch. The deposit process can be conducted without restrictions, adhering to existing instructions and statutory provisions.

The Rs 2,000 banknotes were initially introduced in November 2016 under Section 24(1) of RBI Act, 1934, to swiftly address the currency requirements of the economy following the withdrawal of Rs 500 and Rs 1000 banknotes as legal tender at the time. The objective of introducing the Rs 2,000 banknotes was successfully achieved as an adequate supply of banknotes in other denominations became available. Consequently, the printing of Rs 2,000 banknotes was halted during the fiscal year 2018-19. Approximately 89% of these banknotes were issued prior to March 2017 and are approaching the end of their projected lifespan of 4-5 years.

Over time, the total value of Rs 2,000 banknotes in circulation has decreased significantly, amounting to ₹3.62 lakh crore, which constitutes a mere 10.8% of the total notes in circulation as of 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. 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.

To ensure a smooth transition and minimize disruptions, banks will facilitate the exchange of Rs 2,000 banknotes for other denominations up to a limit of Rs 20,000 at a time, beginning May 23, 2023. The RBI has set a deadline of September 30, 2023, for all banks to provide deposit and/or exchange facilities for Rs 2,000 banknotes. In addition to bank branches, the 19 Regional Offices (ROs) of RBI, which have Issue Departments, will also offer the exchange facility starting from May 23, 2023.

Banks have been advised by the RBI to stop the issuance of Rs 2,000 denomination banknotes with immediate effect. The RBI encourages the public to utilize the time until September 30, 2023, to deposit and/or exchange their Rs 2,000 banknotes. A detailed FAQ document regarding this withdrawal has been made available on the RBI website to assist and inform the public.


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