Five Times The RBI Has Withdrawn Or Demonetised Indian Currency Notes In The Past

More than six years after demonetising the ?500 and ?1,000 notes and introducing new ?500 and ?2,000 notes, the RBI recently announced that ?2,000 currency notes were being withdrawn from circulation.

The RBI has given the public time till September 30 to exchange or deposit the high-denomination note.

?2,000 Notes Withdrawn, Not Demonetised

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The ?2,000 note was introduced in November 2016 to meet the currency requirement after Rs 500 and Rs 1,000 notes were demonetised. As the objective of the ?2,000 notes was met and smaller denomination notes were available in adequate quantities, the printing of the Rs 2,000 note stopped in 2018-19, and now the RBI has decided to pull it out of circulation.

Some netizens were quick to label this move as Demonetisation 2.0, which it isn¡¯t.

Demonetisation makes the currency notes invalid from the day the decision comes into force, while withdrawal means that the market would not get a new supply of the currency note and the existing notes will remain legal tender but exhausted gradually.

Also, this is not the first time that a currency note has been withdrawn in India's history. From 1946 to 2023, currency notes have been either withdrawn or demonetised not once or twice but in fact five times.

Timeline Of Currency Note Withdrawal Or Demonetisation In India

1. 1946: ?500, ?1000, and ?10,000 notes demonetised

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In consultation with the then RBI governor Chintaman Dwarakanath Deshmukh, the British government decided to demonetise notes of Rs 500 and above denominations, citing World War II and rising black market operations as the reason for the big move.

¡°Following similar action in several foreign countries, including France, Belgium and the U.K., the government of India decided on demonetisation of high denomination notes, in January 1946,¡± RBI documents reportedly mention.

On January 12, 1946, two ordinances were issued, demonetising Rs 500, Rs 1000, and Rs 10,000 currency notes.

The Bank Notes (Declaration of Holdings) Ordinance, 1946, required all banks and government treasuries in British India to furnish to the RBI by 3 pm on the same day, a statement of their holdings of banknotes of Rs 100, Rs 500, Rs 1,000 and Rs 10,000 as at the close of business on the previous day, as per Moneycontrol report.

The second ordinance, the High Denomination Bank Notes (Demonetisation) Ordinance, 1946, demonetised banknotes of the denominations of Rs 500 and above with effect from the expiry of January 12, 1946. However, eight years later in 1954, all three notes were reintroduced.

Also Read: Did You Know About India's Rs 10,000 Rupee Note

2. 1978: ?1,000, ?5,000 and ?10,000 notes demonetised

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In the early 1970s, the Wanchoo Committee, which was a direct tax inquiry panel set up by the government and led by former Chief Justice of India Kailash Wanchoo, suggested demonetisation of some notes as a measure to tackle the spread of black money and corruption.

Years later, the Janata Party government, led by the then Prime Minister Morarji Desai, demonetised Rs 1,000, Rs 5,000 and Rs 10,000 notes on January 16, 1978, under the High Denomination Bank Notes (Demonetization) Ordinance, 1978.

In his budget speech on February 28, 1978, finance minister HM Patel reportedly said the decision was part of a series of measures the government had taken to control illegal transactions and against anti-social elements. However, I.G. Patel, the Reserve Bank of India (RBI) governor at the time, was not in favour of the move.

Also, the ?1,000 banknote was again re-introduced in November 2000, under the government of Atal Bihari Vajpayee.

3. 2014: Notes issued before 2005 withdrawn

On January 22, 2014, the RBI said that after March 31, 2014, it would withdraw all banknotes issued before 2005 from circulation.

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¡°From April 1, 2014, the public will be required to approach banks for exchanging these notes. Banks will provide an exchange facility for these notes until further communication,¡± the central bank said.

As per the report, these notes were withdrawn because the currency printed before 2005 had fewer security features when compared with the banknotes printed after 2005. To help people identify the currency issued before 2005, the RBI said these notes didn't have the year of printing on the reverse side.

4. 2016: ?500 & ?1,000 notes demonetised

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On November 8, 2016, India's Prime Minister Narendra Modi announced the demonetisation of Rs 500 and Rs 1,000 notes, which ceased to be legal tenders. Simultaneously, the government and the RBI announced the issuance of new Rs 500 and Rs 2,000 banknotes.

While announcing the demonetisation decision, PM Modi said the move would reduce the use of illicit and counterfeit cash to fund illegal activities and terrorism. It would also help in curbing black money, he had said in his televised address to the nation.

Also Read: 6 Years On Since Demonetization, Here's What Happened To The Old 500 & 1000 Rupee Notes

5. 2023: ?2,000 notes withdrawn from circulation

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As recently as on May 19th 2023, the RBI announced the withdrawal of Rs 2,000 notes from circulation as part of the 'clean note' policy. The public can deposit or exchange Rs 2,000 notes, which will remain legal tender, at bank branches or designated RBI offices till September 30, 2023. RBI has also said that these notes will remain legal even after Sept 30th 2023.

Also Read: Five Surprisingly Lesser Known Facts About World's Money

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