The Reserve Bank of India (RBI) on Friday asked banks to stop issuing Rs 2,000 notes with immediate effect. The Rs 2,000 notes will continue to be legal tender, the RBI said in a statement.
Unlike the November 2016 shock demonetisation when old Rs 500 and Rs 1,000 notes were invalidated overnight, the Rs 2,000 notes will continue to be legal tender till September 30, 2023.
In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, the RBI said exchange of Rs 2,000 bank notes into bank notes 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.
In the statement, the central bank stated: “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 banknotes in ₹2000 denomination will continue to be legal tender. To complete the exercise in a time-bound manner and to provide adequate time to the members of public, all banks shall provide deposit and/or exchange facility for ₹2000 banknotes until September 30, 2023.”
The central bank has asked the public to deposit Rs 2,000 bank notes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch.
"Members of the public are encouraged to utilise the time up to September 30, 2023, to deposit and/or exchange the Rs 2,000 bank notes," the central bank said.
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, it said.
The move comes amid alleged concerns about the highest denomination notes being used to hoard black money.
The RBI had stopped printing Rs 2,000 notes in 2018-19 and the notes were rarely in circulation.
The Rs 2,000 denomination bank note 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 bank notes in circulation at that time.
The RBI said it has also been observed that Rs 2,000 denomination note is not commonly used for transactions.
To complete the exercise in a time-bound manner and to provide adequate time to the members of public, the RBI has asked all banks to provide deposit and/or exchange facility for Rs 2,000 bank notes until September 30, 2023.
Also, the facility for the exchange of Rs 2,000 bank notes up to the limit of Rs 20,000 at a time shall also be provided at the 19 Regional Offices (ROs) of RBI having Issue Departments from May 23, 2023.
As per the RBI, about 89 per cent 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 such banknotes in circulation has declined from Rs 6.73 lakh crore at its peak on March 31, 2018 (37.3 per cent of notes in circulation) to Rs 3.62 lakh crore constituting only 10.8 per cent of notes in circulation as on March 31, 2023.
In January 2014, the RBI announced the withdrawal from circulation of all bank notes issued prior to 2005.
(With PTI inputs)