RBI announces the withdrawal of Rs.2000 notes from September ’23 and has requested the public to exchange or deposit them within the deadline. The exchange of currency will be allowed starting May ’23 with a cap of Rs.20000 per transaction.
RBI revisits demonetization with Rs.2000 note
The Reserve Bank Of India has declared that Rs.2000 note will cease to circulate starting September 2023 and hence the currency notes need to be deposited in the banks or exchanged within the above-mentioned deadline. However, an upper ceiling of Rs.20,000 has been imposed for such exchanges or deposits per transaction. The Rs.2000 note came into being during the demonetization in 2016 when old Rs.500 and Rs.1000 notes were withdrawn with immediate effect from the time of announcement. RBI has also advised that the banks should stop issuing Rs.2000 notes going forward.
“In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of Rs 2,000 banknotes can be made up to a limit of Rs 20,000 at a time, at any bank starting from May 23, to complete the exercise in a time-bound manner and to provide adequate time to the members of the public, all banks shall provide deposit and/ or exchange facility for Rs 2,000 banknotes until September 30, 2023,” it said.
RBI explains the need for demonetization
The RBI official attributed the move to several reasons. “One, there was the issue of soiled Rs 2,000 notes lying with the RBI. The other was that Rs 2,000 notes are not popular and they are just lying around. They have run their life cycle. Even at the peak of their being in circulation, they did not comprise much of the currency in circulation and, at present, are only 10%-11% of the total currency. When the demonetization of Rs 500 and Rs 1000 notes was done in 2016, they comprised 80% of the total currency in circulation. So there is a huge difference.”
According to the RBI news and states, about 89 percent of the Rs 2,000 denomination notes were issued prior to March 2017 and are at the end of their estimated life span of four-five years.
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