In the recent announcement, the Reserve Bank of India (RBI) declared the withdrawal of the Rs 2,000 currency note from circulation. Although the note will continue to be a legal tender, the RBI has set a deadline for depositing or exchanging existing Rs 2,000 notes in banks until September 30, with a limit of Rs 20,000 at a time. This decision has raised various questions and speculations among the public.
The Rs 2,000 note was introduced in November 2016 during the demonetization exercise, when Rs 500 and Rs 1,000 notes were withdrawn from circulation. Its primary purpose was to meet the immediate currency requirements of the economy. However, as time progressed, it became evident that the Rs. 2,000 note was not widely used for transactions. Furthermore, the RBI noticed that a significant portion of the notes had become soiled and were lying unused. Hence, the decision to withdraw the note was made.
1. Soiled Notes: A substantial number of Rs 2,000 notes had deteriorated, leading to concerns regarding their usability. By withdrawing these notes from circulation, the RBI aims to maintain the quality and integrity of the currency in circulation.
2. Limited Usage: The Rs 2,000 note never gained widespread popularity for everyday transactions. Its large denomination made it less convenient for day-to-day purchases, and people tended to prefer smaller denominations. With the availability of other currency notes in adequate quantities, the need for the Rs. 2,000 note diminished over time.
3. Life Cycle and Replacement: According to the RBI, about 89% of the Rs 2,000 notes were issued prior to March 2017 and have reached their estimated life span of four to five years. The RBI aims to replace these worn-out notes with fresh currency, ensuring the availability of usable banknotes in circulation.
4. Currency Composition: At its peak, the Rs 2,000 note comprised only a small percentage (10-11%) of the total currency in circulation. In contrast, during the demonetization in 2016, the Rs 500 and Rs 1,000 notes accounted for a significant majority (80%) of the total currency in circulation. This illustrates the difference in importance and usage between the two scenarios.
To facilitate a smooth transition, the RBI has provided a time frame for depositing or exchanging Rs 2,000 notes until September 30, 2023. Individuals can visit their banks or the regional offices of the RBI for this purpose. The RBI has also instructed banks to cease issuing Rs. 2,000 notes with immediate effect.
The withdrawal of the Rs. 2,000 note is not expected to have a significant impact on daily transactions or the economy. The stock of other denomination notes remains sufficient to cater to the currency requirements of the public. Moreover, the decision to withdraw the note was not solely made by the RBI, suggesting that it involved consultation with the relevant authorities, including the Finance Ministry.
The RBI has announced that the facility for deposit and/or exchange of ₹2000 banknotes will be available to the public until September 30, 2023. This means that individuals can either deposit these banknotes into their bank accounts or exchange them for lower denominations or other valid currency.
Individuals can deposit ₹2000 banknotes into their accounts with any bank in the usual manner, without any restrictions, subject to compliance with KYC norms and other applicable statutory requirements. Banks also comply with Cash Transaction Reporting (CTR) and Suspicious Transaction Reporting (STR) requirements where applicable.
All banks are obligated to provide the facility for the exchange of ₹2000 banknotes to lower denominations through their branches. To ensure operational convenience and avoid disruption of regular bank activities, banks may exchange these banknotes up to a limit of ₹20,000 at a time. This means that individuals can exchange a maximum of ₹20,000 worth of ₹2000 banknotes in a single transaction.
Business Correspondents (BCs) may also be allowed to exchange ₹2000 banknotes for account holders, with a daily limit of ₹4000. Banks have the discretion to enhance the cash holding limits of BCs to facilitate this service. These BCs play an essential role in extending banking services to remote and unbanked areas.
To ensure a smooth transition, individuals have been requested to approach their banks or branches from May 23, 2023, onwards to avail themselves of the exchange facility. Deposit of ₹2000 banknotes can continue as per regular banking practice. In remote or unbanked areas, banks have been encouraged by RBI to consider using mobile vans to provide deposit and exchange services.
Banks are expected to make special arrangements to minimize inconvenience for senior citizens, persons with disabilities, and women seeking to exchange or deposit ₹2000 banknotes. These measures may include designated counters, priority services, and any necessary assistance required.
While crediting the value of ₹2000 banknotes to Jan Dhan Yojana Accounts or Basic Savings Bank Deposit (BSBD) Accounts, the usual limits will apply mutatis mutandis. This is to ensure that the existing guidelines and limits for these specific accounts remain in place.
The 2000 denomination banknote was introduced in November 2016 under Section 24(1) of the RBI Act, 1934, primarily with the goal of meeting the economy's currency requirements in a timely manner following the withdrawal of the legal tender status of all 500 and 1000 banknotes in circulation at the time. With the achievement of that goal and the availability of banknotes in other denominations in sufficient quantities, printing of 2000 banknotes was halted in 2018-19. The majority of the 2000 denomination notes were issued prior to March 2017 and have reached the end of their 4-5 year estimated life-span. As, this denomination is also not commonly used for transactions, according to observations. Furthermore, the stock of banknotes in other denominations remains sufficient to meet the public's currency needs.
It is a policy adopted by RBI to ensure availability of good quality banknotes to the public.
Yes. The ₹2000 banknote will continue to maintain its legal tender status.
Yes. The general public can continue to use 2000 banknotes in their transactions and accept them as payment. They are, however, advised to deposit and/or exchange these banknotes by September 30, 2023.
Public can approach bank branches to deposit and/or exchange their 2000 banknotes.
Depositing money into accounts and exchanging it for 2000 banknotes will be possible at all banks until September 30, 2023. The exchange facility will also be available at the RBI's 19 Regional Offices (ROs) with Issue Departments until September 30, 2023.
Deposits into bank accounts are permitted without restriction, subject to compliance with existing KYC norms and other applicable statutory / regulatory requirements.
Public can exchange ₹2000 banknotes upto to a limit of ₹20,000/- at a time.
Yes, exchange of ₹2000 banknotes can be made through BCs upto a limit of ₹4000/- per day for an individual account holder.
To give time to the banks to make necessary arrangements, Public are requested to approach the bank branches or ROs of RBI from May 23, 2023 for availing exchange facility.
No. A non-account holder also can exchange ₹2000 banknotes up to a limit of ₹20,000/- at a time at any bank branch.
There are no restrictions on deposits into accounts. The 2000 banknotes can be deposited into bank accounts, and cash withdrawals can be made against these deposits.
No. The exchange facility will be provided free of cost.
Banks have been instructed by the RBI to make arrangements to reduce inconvenience to senior citizens, persons with disabilities, etc., seeking to exchange/deposit ₹2000 banknotes.
A time limit of more than four months has been provided for the deposit and/or exchange of Rs. 2000 banknotes in order to make the process simple and convenient for the public. Public are encouraged to use this facility whenever it is convenient within the allotted time.
In the case of poor service, the complainant or aggrieved customer should first contact the relevant bank for redress of grievance. if the bank does not respond within 30 days of receiving the complaint or if the complainant is dissatisfied with the response or resolution provided by the bank. The complaint can be filed under the Reserve Bank - Integrated Ombudsman Scheme (RB-IOS), 2021, at the Complaint Management System portal of RBI (cms.rbi.org.in),
The withdrawal of the Rs 2,000 note by the RBI marks a routine exercise undertaken to maintain the quality and efficiency of currency circulation in India. With concerns over the usability of soiled notes and the limited popularity of the denomination, the RBI has opted to phase out the Rs 2,000 note gradually. By providing a generous timeframe for depositing or exchanging these notes, the RBI aims to ensure a smooth transition without causing undue disruptions.
As the Indian economy continues to evolve, it is essential to adapt the currency landscape to meet the changing needs and preferences of the public. The withdrawal of the Rs. 2,000 note is a step in this direction, enabling the circulation of currency notes that are more convenient for everyday transactions.