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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


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