What Will Happen To The Discarded ?2,000 Currency Notes Now?

As part of its 'Clean Note Policy,' India's central bank announced that 2,000 currency notes will no longer be in circulation in the world's fifth-largest economy. The Reserve Bank of India has set September 30, 2023, as the deadline for exchanging the obsolete notes.

The notes, however, will remain legal tender. 2,000 currency notes represented 10.8 percent of the notes in circulation as of March 31, 2023. This equates to around 3.62 lakh crore of cash notes.

While explaining the move, the Reserve Bank of India stated that the stock of other banknotes in different denominations remains "adequate" to suit the public's cash needs.

What will happen to the returned currency notes now?

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The Reserve Bank of India will reintroduce its amazing Currency Verification and Processing System (CVPS) for the 2,000 currency notes that have reached the end of their useful lives.

What the RBI will do with decommissioned currency notes: Concerning the Currency Verification Processing System The RBI has policies in place to dispose of notes that are no longer fit for circulation.

After being collected from the respective banks, the currency notes are deposited at the Reserve Bank's issue offices. The RBI checks currency notes to assess their validity after grouping and classifying them under the Currency Verification and Processing System (CVPS).

BCCL

Each CVPS system can process up to 60,000 cash notes per hour. CVPS counts the notes and distinguishes between genuine and counterfeit cash notes. Shredding is used to destroy the counterfeit notes.

However, there is a catch. Genuine currency notes that still had quality and life left before being deemed destroyed are shredded so that they can be recycled into new money papers.

This means that the paper required to create the 2,000 currency note will eventually end up in your pocket in a different denomination.

What happens to counterfeit or low-quality cash notes?

They are crushed and made into briquettes. The Reserve Bank of India invites tenders for the sale of such briquettes for industrial use.

When India's Prime Minister Narendra Modi announced the demonetisation of around 89% of the country's cash in circulation in 2016, the RBI's state branch in Kerala state's Thiruvananthapuram sold it to The Western India Plywoods Limited, India's only hardboard-making factory.

To generate hardboards, the facility in the state's Kannur area apparently combines about 5% of the paper pulp created from these notes with 95% regular wood pulp.

Reuters

The Kannur factory reportedly received roughly 80 metric tonnes of shredded demonetised notes in the three weeks following the demonetisation's implementation on November 8, 2016.

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