The Reserve Bank of India announced on Friday that currency notes of Rs 2,000 denomination will be withdrawn from circulation. It also advised the general public to exchange or deposit them in their bank accounts by September 30.
Rs 2,000 notes one has into one’s bank account or alternatively or additionally exchange a maximum of ten such notes a day at any branch of any bank till September 30, 2023. The 2,000-denomination bank note was introduced in November 2016 after the Modi government had announced demonetization of Rs 500 and Rs 1,000 notes. As per RBI, the objective of introducing the Rs 2,000 notes was to meet the urgent demand for currency notes on the back of demonetization which had sucked out as much as 86% of the currency in circulation.
In a way, it represented a ham-handed approach to re-monetization on the back of demonetization. This time around it won’t be all that crippling as Rs 2,000 notes constitute just 10% of the currency in circulation. The Rs 2,000 note will, however, continue to be honoured as legal tender.
This means it will be accepted if offered in payment of a debt. But it is also a fact that no sensible person would accept the Rs 2,000 note in a trade transaction unless he can wangle a discount i.e., accepting it for profit. In other words, if you have to pay a trader Rs 1,800, he may accept a Rs 2,000 note and keep the change! Be that as it may. The window to exchange Rs 2,000 notes will open on May 23, since the RBI wants to give banks time to make preparatory arrangements.
The facility to exchange Rs 2,000 notes will also be available at 19 regional offices of RBI. It is not necessary for a person to be a customer of the bank to exchange notes. The RBI has also advised banks to stop issuing Rs 2,000 denomination banknotes with immediate effect. This change has been brought about in pursuance of RBI's “Clean Note Policy”, the RBI said in its communiqué. About 89% of the Rs 2,000 denomination notes were issued prior to March 2017 and are at the end of their estimated lifespan of 4-5 years.
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