Reserve Bank Of India Withdraws ₹2,000 Notes From Circulation In Clean Note Policy

In a move to promote its "Clean Note Policy," the Reserve Bank of India (RBI) has decided to withdraw ₹2,000 denomination banknotes from circulation. However, it is important to note that the ₹2,000 notes will remain legal tender. This decision, reminiscent of the demonetization period, may cause strain on the banking system and inconvenience to the public, as witnessed before. The RBI has advised the public to deposit their ₹2,000 notes into their bank accounts or exchange them for banknotes of other denominations at any branch.

To ensure operational convenience and avoid disruptions, the exchange of ₹2,000 notes for other denominations will be allowed up to a limit of ₹20,000 at a time, starting from May 23, 2023. Banks have been directed to provide deposit and exchange facilities for ₹2,000 notes until September 30, 2023, to allow sufficient time for the public to complete the process. Guidelines have been issued by the RBI to facilitate this transition.

The facility for exchanging ₹2,000 notes will also be available at the 19 Regional Offices of the RBI with "Issue Departments" from May 23, 2023. However, banks have been instructed to discontinue issuing ₹2,000 notes immediately. The RBI encourages the public to utilize the time until September 30, 2023, to deposit or exchange their ₹2,000 notes. The introduction of the ₹2,000 banknote in 2016 aimed to meet the currency requirements following the withdrawal of ₹500 and ₹1,000 notes from circulation. With the availability of banknotes in other denominations, the objective of the ₹2,000 notes has been fulfilled.

Notably, printing of ₹2,000 notes ceased in 2018-19, and a significant portion of these notes issued prior to March 2017 is reaching the end of their estimated lifespan. The total value of ₹2,000 notes in circulation has declined over time, making up only a small fraction of the total notes in circulation on March 31, 2023. The RBI has observed that this denomination is not commonly used for transactions, and an adequate stock of banknotes in other denominations is available to meet public demand.