Skip to main content

Withdrawal of ₹2000 Banknotes from Circulation

Reserve Bank of India (RBI) has announced withdrawal of ₹2000 denomination banknotes from circulation.

When and why was banknote of ₹2000 introduced?

  • The ₹2000 denomination banknote was introduced in November 2016 under Section 24(1) of Reserve Bank of India (RBI) Act, 1934.
  • It was introduced primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of legal tender status of all ₹500 and ₹1000 banknotes in circulation at that time. 

Why and when was printing of ₹2000 banknote stopped?

  • The objective of introducing ₹2000 banknotes was met once banknotes in other denominations became available in adequate quantities. 
  • Therefore, printing of ₹2000 banknotes was stopped in 2018-19.

What is the status of ₹2000 banknotes in circulation?

The total value of ₹2000 banknotes in circulation has declined from ₹6.73 lakh crore at its peak as on March 31, 2018 (37.3% of Notes in Circulation) to ₹3.62 lakh crore constituting only 10.8% of Notes in Circulation on March 31, 2023. 

Why is RBI withdrawing banknote of ₹2000?

  • It has been observed that ₹2000 denomination is not commonly used for transactions. 
  • The stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public.
  • About 89% of the ₹2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years. In pursuance of the “Clean Note Policy” of RBI, it has been decided to withdraw the ₹2000 denomination banknotes from circulation.

What are the implications of withdrawal of ₹2000 banknote?

  • The banknotes in ₹2000 denomination will continue to be legal tender.
  • Public can continue to use ₹2000 banknotes for their transactions and also receive them in payment. However, they are encouraged to deposit and / or exchange these banknotes.
  • RBI has advised banks to stop issuing ₹2000 denomination banknotes with immediate effect.

Where can ₹2000 banknote be deposited and / or exchanged?

  • Public may deposit ₹2000 banknotes into their bank accounts and / or exchange them into banknotes 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 Know Your Customer (KYC) norms and other applicable statutory provisions.
  • To ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of ₹2000 banknotes into banknotes of other denominations can be made upto a limit of ₹20,000/- at a time at any bank.
  • Business Correspondents (BCs) can exchange ₹2000 banknotes upto a limit of ₹4000/- per day for an account holder.
  • The facility for exchange of ₹2000 banknotes up to the limit of ₹20,000/- at a time shall also be provided at the 19 Regional Offices (ROs) of RBI having Issue Departments (i.e. ROs at Ahmedabad, Bangalore, Belapur, Bhopal, Bhubaneswar, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Jammu, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram).

What is the start and end date for deposit and / or exchange of ₹2000 banknote?

The facility for deposit and / or exchange of ₹2000 banknotes shall be available for public from May 23, 2023 to September 30, 2023.

What if any bank refuses to exchange / accept deposit of ₹2000 banknote?

  • For redress of grievance in case of deficiency of service, the complainant / aggrieved customer may first approach the concerned bank. 
  • If the bank does not respond within a period of 30 days after lodging of the complaint or if the complainant is not satisfied with the response / resolution given by the bank, the complainant can lodge the complaint under the Reserve Bank - Integrated Ombudsman Scheme (RB-IOS), 2021 at the Complaint Management System portal of RBI (cms.rbi.org.in).

How withdrawal of ₹2000 banknote is different from demonetization of ₹500 and ₹1000?

  • During demonetization, the banknotes of ₹500 and ₹1000 ceased to be legal tender, however, ₹2000 continues to be a legal tender.
  • The demonetization was in accordance with Section 26 of RBI Act, whereas withdrawal of ₹2000 is in accordance with Section 27 of RBI Act. 
  • Demonetization of ₹500 and ₹1000 banknotes comprised around 86% of banknotes in circulation (in value terms), while withdrawal of ₹2000 will impact just about 10.8% (₹3.62 lakh crore) of banknotes in circulation as on March 31, 2023.
  • Demonetization of ₹500 and ₹1000 banknotes was with the intention to curb black money, whereas withdrawal of ₹2000 is because these notes have served the intended purpose and are now not much in usage.


References

Reserve Bank of India. (2023, May 19). 'FAQ - ₹2000 Denomination Banknotes – Withdrawal from Circulation; Will continue as Legal Tender'. Retrieved from https://www.rbi.org.in/Scripts/FAQView.aspx?Id=157

Reserve Bank of India. (2023, May 19). 'Notification - ₹2000 Denomination Banknotes – Withdrawal from Circulation; Will continue as Legal Tender'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12505&Mode=0

Reserve Bank of India. (2023, May 19). 'Press Release - ₹2000 Denomination Banknotes – Withdrawal from Circulation; Will continue as Legal Tender'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=55707


Follow at - Telegram   Instagram   LinkedIn   Twitter   Facebook

Comments

Popular Posts

Highlights of RBI Annual Report 2023-24 – Chapter 7 to 12

Reserve Bank of India (RBI) has published its annual report for the financial year 2023-24. In a series of articles, we will go through the highlights of the report. This is the fifth and last article in the series.  Chapter 7 – Public Debt Management Ways And Means Advances (WMA) limit for the Government of India (GoI) for H1:2023-24 (April to September 2023) was fixed at ₹1,50,000 crore and for H2:2023-24 (October 2023 to March 2024) was fixed at ₹50,000 crore. RBI issued an ultra-long security of 50-year tenor aggregating ₹30,000 crore to cater to the growing needs of long-term institutional players. Issuance of Sovereign Green Bonds (SGrBs) for an aggregate amount of ₹20,000 crore included maiden issuance of 30-year (₹10,000 crore) SGrB in addition to 5-year (₹5,000 crore) and 10-year (₹5,000 crore) SGrBs. A new 3-year benchmark security was introduced as part of government market borrowing programme during H1:2023-24.  The basket of products offered through the ‘Retail ...

Lending against Gold and Silver collateral

Reserve Bank of India (RBI) has issued directions on lending against the collateral of gold and silver. To whom are the directions applicable? The directions are applicable to the following regulated entities (REs) – Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks, but excluding Payments Banks). Primary (Urban) Co-operative Banks (UCBs) & Rural Co-operative Banks (RCBs), i.e., State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs). Non-Banking Financial Companies (NBFCs), including Housing Finance Companies (HFCs). Which loans are covered under the directions? The directions shall apply to all loans offered by an RE for the purpose of consumption or income generation (including farm credit) where eligible gold or silver collateral is accepted as a collateral security. What is eligible collateral? Eligible collateral means the collateral of jewellery, ornaments or coins made of gold or silver. A lender shall not grant any ad...

Prior approvals from or intimations / reporting to RBI by NBFC-BL

Non-Banking Financial Companies (NBFCs) are required to obtain prior approvals from Reserve Bank of India (RBI) or intimate / report to RBI various events. This article lists out some of such important events where prior approvals or intimations / reporting is required for Base Layer NBFCs (NBFC-BL). Events requiring prior approval from RBI  Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 dated October 19, 2023 Para 30 – NBFCs shall prepare its balance sheet and profit and loss account as on March 31 every year. Whenever an NBFC intends to extend the date of its balance sheet as per provisions of the Companies Act, 2013, it shall take prior approval of RBI before approaching the Registrar of Companies for this purpose. Even in cases where RBI and the Registrar of Companies grant extension of time, the NBFC shall furnish to RBI a proforma balance sheet (unaudited) as on March 31 of the year and the statutory returns ...

RBI’s Monetary Policy (June 06, 2025): In A Nutshell

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on June 06, 2025. Here are some of the highlights of the monetary policy announcement. Rates   Change Rate Policy repo rate Reduced by 0.50% 5.50% Standing deposit facility (SDF) rate 5.25% Marginal standing facility (MSF) rate 5.75% Bank rate 5.75% Monetary policy stance Monetary policy stance was changed from ‘accommodative’ to ‘neutral’. Domestic Economy  The Indian economy presents a picture of strength, stability, and opportunity. The 5x3x3 matrix of fundamentals provides the necessary core strength to cushion the Indian economy against global spillovers and propel it to grow at a faster pace.  First, strength comes from the strong balance sheets of the 5 major sectors - corporates, banks, households, government, and the external sector.  Second, there is stability on all 3 fronts – price, financial, and political – providing policy and economic certainty.  Third, the Indian ec...

What is KYC?

Be it opening a new bank account, applying for a new credit card, registering for new e-wallet, or any other account or facility involving financial matters, the application process is incomplete until KYC is done.  What is KYC? KYC or Know Your Customer is a process of customer identification and verification while opening an account or undertaking a financial transaction. Why is KYC process needed? To prevent money laundering To combat financing of terrorism What is verified under KYC? The banks / financial institutions collect the relevant documents from the customers to verify the following – Proof of identity Proof of address Which documents can be collected for KYC? As per RBI’s Master Direction - Know Your Customer (KYC) Direction, 2016 (Updated as on May 10, 2021), “Officially Valid Document” (OVD) means – Passport Driving licence Proof of possession of Aadhaar number Voter's Identity Card issued by the Election Commission of India Job card issued by NREGA duly signed by an...