Published On: Fri, May 19th, 2023

RBI decides to withdraw Rs 2,000 notes from circulation

New Delhi: The Reserve Bank of India (RBI) on Friday said it has decided to withdraw Rs 2,000 currency notes from circulation.

It has been decided to withdraw the Rs 2000 denomination banknotes from circulation

While banks have been advised not to issue Rs 2,000 notes with immediate effect, citizens need not worry as the withdrawal will be carried out in a “time-bound” and systematic manner.

In a press release, the central bank said the Rs 2,000 notes that are currently in circulation will continue to be legal tender. So, people can use them for transactions and also receive them in payment for now.

However, the RBI has “encouraged” the public to deposit and/or exchange these banknotes on or before September 30, 2023.

Simply put, the move to withdraw Rs 2,000 banknotes will have no immediate impact on citizens as they will get enough time to get them exchanged.

The RBI said members of the public will have the option to deposit Rs 2,000 banknotes into their bank accounts or exchange them for currency notes of other denominations at any bank branch.

“Deposit into bank accounts can be made in the usual manner, that is, without restrictions and subject to extant instructions and other applicable statutory provisions,” RBI said.

“In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of Rs 2,000 banknotes into banknotes of other denominations can be made up to a limit of Rs 20,000/- at a time at any bank starting from May 23, 2023,” the central bank added.

While there is an operational limit of Rs 20,000 on the amount of Rs 2,000 banknotes that can be exchanged in one go, there is no specific limit that is applicable.

RBI said, “Deposit into bank accounts can be made without restrictions subject to compliance with extant Know Your Customer (KYC) norms and other applicable statutory/regulatory requirements.”

Yes, the exchange of Rs 2,000 notes can be made through Business Correspondents (BCs) up to a limit of Rs 4,000 per day for an account holder.

The RBI has requested people to approach bank branches or ROs of bank branches or ROs of RBI from May 23, 2023, to exchange the Rs 2,000 notes.

“To give time to the banks to make preparatory arrangements, members of the public are requested to approach the bank branches or ROs of RBI from May 23, 2023, for availing exchange facility,” RBI said.

Yes, customers who want to exchange Rs 2,000 notes can go to any bank branch. The RBI said, “A non-account holder also can exchange Rs 2,000 banknotes up to a limit of Rs 20,000 at a time at any bank branch.”

The RBI issued a detailed FAQ, explaining why it decided to withdraw Rs 2,000 notes.

It said the primary objective of introducing Rs 2,000 notes in November 2016 was to meet the currency requirement of the economy in an “expeditious manner” after demonetisation, which was basically the withdrawal of all old Rs 500 and Rs 1,000 banknotes in circulation as legal tender.

“With fulfilment of that objective and availability of banknotes in other denominations in adequate quantities, printing of Rs 2,000 banknotes was stopped in 2018-19. A majority of the Rs 2,000 denomination notes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years,” the RBI said.

“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 requirements of the public. In view of the above, and in pursuance of the ‘Clean Note Policy’ of the Reserve Bank of India, it has been decided to withdraw the Rs 2000 denomination banknotes from circulation,” the central bank added.

It may be noted that the “Clean Note Policy” of the RBI is a policy to ensure the availability of good quality banknotes to people.

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