The Reserve Bank of India (RBI) recently announced that over 98 per cent of the Rs 2000 banknotes, which were in circulation as of May 19, 2023, have now been returned. This significant return of high-value currency notes indicates the effectiveness of the withdrawal strategy implemented by the RBI. The total value of such notes outside the banking system has come down to Rs 6970 crore at the close of business on October 31, 2024.
The total value of these banknotes in circulation was Rs 3.56 lakh crore at the close of business on May 19, 2023, when the withdrawal of Rs 2000 banknotes was announced. This means that less than 2 per cent of them are still in circulation. Despite the withdrawal, the Rs 2000 banknotes continue to be legal tender, and the facility for their exchange is available at the 19 Issue Offices of the Reserve Bank since May 19, 2023.
From October 9, 2023, RBI Issue Offices also started accepting Rs 2000 banknotes from individuals and entities for deposit into their bank accounts. In addition, members of the public have been sending Rs 2000 banknotes through India Post from any post office within the country to any of the RBI Issue Offices for credit to their bank accounts.
The Withdrawal of Rs 2000 Banknotes
The RBI had announced the withdrawal of Rs 2000 denomination banknotes from circulation on May 19, 2023. The status of withdrawal of Rs 2000 banknotes is periodically published by the RBI. The last press release in this regard was published on October 1, 2024. The facility for deposit or exchange of the Rs 2000 banknotes was available at all bank branches in the country up to October 7, 2023.
The Rs 2000 denomination banknote was introduced in November 2016 primarily with the objective of meeting the currency requirement of the economy in an expeditious manner after the withdrawal of the legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time. With the fulfilment of that objective and the availability of banknotes in other denominations in adequate quantities, the printing of Rs 2000 banknotes was stopped in 2018-19.
A majority of the Rs 2000 banknotes were issued prior to March 2017 and were at the end of their estimated life span of 4-5 years. It was also observed that this denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations was considered to be adequate to meet the currency requirement of the public.
The Clean Note Policy and Its Impact
In view of this and in pursuance of the 'Clean Note Policy' of the Reserve Bank of India (RBI), it has been decided to withdraw the Rs 2000 denomination banknote from circulation. The RBI's clean note policy aims to ensure the availability of good quality banknotes to members of the public.
This move by the RBI is reminiscent of the historical event of demonetization in 2016, when the Indian government decided to withdraw the legal tender status of Rs 500 and Rs 1000 banknotes. This was done with the objective of curbing black money, counterfeit currency, and corruption. The introduction of the Rs 2000 banknote was a part of this strategy, aimed at meeting the currency requirement of the economy in an expeditious manner. However, with the fulfilment of that objective and the availability of banknotes in other denominations in adequate quantities, the printing of Rs 2000 banknotes was stopped in 2018-19.
