RBI Announces Withdrawal of ₹2000 Banknotes as Legal Tender by September 30
Withdrawal of ₹2000 banknotes.
₹2000 banknotes will no longer be considered legal tender after September 30, as announced by the Reserve Bank of India (RBI). The RBI has instructed banks to offer deposit and/or exchange services for ₹2,000 notes until September 30, 2023.
While the ₹2000 currency note will be withdrawn from circulation, it will still retain its status as legal tender. The introduction of the ₹2000 denomination banknote in November 2016 was primarily aimed at swiftly meeting the currency demands of the economy after the withdrawal of the ₹500 and ₹1000 banknotes, which were no longer considered legal tender at the time. The RBI stated, “The objective of introducing ₹2000 banknotes was achieved once banknotes in other denominations became readily available in sufficient quantities.”
Consequently, the printing of ₹2000 banknotes ceased in the financial year 2018-19. Approximately 89% of the ₹2000 denomination banknotes were issued before March 2017 and are now approaching the end of their estimated lifespan of 4-5 years. The total value of these banknotes in circulation has declined from ₹6.73 lakh crore at its peak on March 31, 2018 (constituting 37.3% of the total notes in circulation) to ₹3.62 lakh crore, representing only 10.8% of the notes in circulation as of March 31, 2023. Furthermore, it has been observed that this particular denomination is not commonly utilized for transactions.
Moreover, the stock of banknotes in other denominations remains sufficient to meet the current demands of the public.
Considering the aforementioned factors and in accordance with the Reserve Bank of India’s “Clean Note Policy,” it has been decided to withdraw the ₹2000 denomination banknotes from circulation. However, it is important to note that the ₹2000 banknotes will still retain their legal tender status. It should be noted that the RBI previously undertook a similar withdrawal of notes from circulation in 2013-2014.
As stated in the RBI’s statement, public members may deposit ₹2000 banknotes into their bank accounts or exchange them for banknotes of other denominations at any bank branch. Deposits into bank accounts can be made without any restrictions and in accordance with existing instructions and applicable statutory provisions.
To ensure operational convenience and prevent disruptions to the regular activities of bank branches, the exchange of ₹2000 banknotes for banknotes of other denominations will be limited to ₹20,000 at a time, starting from May 23, 2023.
