RBI Officially Pulls The Plug On Rs 2,000 Notes, Will Continue To Be Legal Tender Till September 30

The Reserve Bank of India (RBI) on Friday said that the Rs 2,000 notes will be withdrawn from circulation.

The RBI has advised banks to stop issuing Rs 2,000 denomination banknotes with immediate effect.

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Rs 2,000 notes can be exchanged at banks

In a statement, the RBI said that banks have been instructed to make arrangements to reduce inconvenience to the senior citizens, persons with disabilities, etc who are seeking to exchange or deposit Rs 2,000 banknotes.

"The facility for deposit into accounts and exchange for Rs 2,000 banknotes will be available at all banks until September 30, 2023. The facility for exchange will be available also at the 19 Regional Offices (ROs) of RBI having Issue Departments1 until September 30, 2023," the RBI said.

How Rs 2,000 notes came into being

The Rs 2,000 notes were introduced in November 2016, following the demonetisation of the existing Rs 500 and Rs 1,000 notes.

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The Rs 2,000 notes were the highest-valued Indian currency yet.

Objective met: RBI

The objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, the printing of Rs 2000 banknotes was stopped subsequently in 2018-19, stated RBI.

About 89 per cent of the Rs 2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life span of four-five years.

The total value of these banknotes in circulation has declined from Rs 6.73 lakh crore at its peak as of 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 on March 31, 2023.

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"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," RBI said Friday.

Not printed since 2019

In the initial days of demonetisation, when the amount of cash people were allowed to withdraw from their accounts was limited and currency in circulation was less, people who had Rs 2,000 notes with them struggled to get change for them.

Many had questioned the logic of introducing a higher denomination currency when lower denomination notes were not available.

However, just over two years after it was introduced, the RBI had quietly pulled the plug on them.

The RBI, in an RTI reply last year said that the '0' number of the said denomination currency notes was printed in 2019-20, 2020-21 and 2021-22.

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