RBI Withdraws Rs 2000 Note: Details on The Central Bank’s Move

[vc_row type=”in_container” full_screen_row_position=”middle” column_margin=”default” column_direction=”default” column_direction_tablet=”default” column_direction_phone=”default” scene_position=”center” text_color=”dark” text_align=”left” row_border_radius=”none” row_border_radius_applies=”bg” overflow=”visible” overlay_strength=”0.3″ gradient_direction=”left_to_right” shape_divider_position=”bottom” bg_image_animation=”none”][vc_column column_padding=”no-extra-padding” column_padding_tablet=”inherit” column_padding_phone=”inherit” column_padding_position=”all” column_element_spacing=”default” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_shadow=”none” column_border_radius=”none” column_link_target=”_self” column_position=”default” gradient_direction=”left_to_right” overlay_strength=”0.3″ width=”1/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” animation_type=”default” bg_image_animation=”none” border_type=”simple” column_border_width=”none” column_border_style=”solid”][vc_column_text css=”.vc_custom_1684566472701{margin-right: 16px !important;margin-left: 16px !important;border-right-width: 10px !important;border-left-width: 10px !important;}”]Many people had a déjà vu moment when the Reserve Bank of India (RBI) on Friday May 19, 2023, announced the withdrawal of Rs 2,000 currency notes from circulation. The last time when the RBI withdrew any currency from circulation was in 2016, when existing Rs 500 and Rs 1000 notes were demonetized, the memories of which are firmly imprinted in public memory.

Explaining the move, the RBI said: “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. The total value of these 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. It has also been observed that this denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public.”

People can continue to use these banknotes for their transactions and also receive them in payment till September 30, 2023. The central bank, however, said people are encouraged to deposit and/or exchange these banknotes on or before September 30, 2023. The Rs 2,000 notes, which were introduced in November 2016 after demonetisation, are the highest denomination in circulation in the country. The withdrawal of Rs 2,000 notes due to increased fake currency in circulation.

The RBI has addressed some of the key concerns regarding the discontinuation of the Rs 2000 note and some of these are listed below.

What should be done with existing notes?

Members of the public may approach bank branches for deposit and/or exchange of Rs 2000 banknotes held by them. The facility for deposit into accounts and exchange for Rs 2000 banknotes will be available at all banks until September 30, 2023. The facility for exchange will be available also at the 19 Regional Offices (ROs) of RBI having Issue Departments until September 30, 2023.

Is there a limit on the amount that can be deposited in the bank at one time?

Deposit into bank accounts can be made without restrictions subject to compliance with existing Know Your Customer (KYC) norms and other applicable regulatory requirements. However, it is restricted to a limit of Rs 20,000 at a time.

Will there be special arrangements for senior citizens, persons with disabilities, etc. for exchange and deposit?

Banks have been instructed to make suitable arrangements to reduce inconvenience to senior citizens, persons with disabilities, etc.

What will happen if one cannot deposit/exchange the banknotes immediately?

To make the entire process smooth and convenient for the public, a period of over four months has been given for the deposit and/or exchange of ₹2000 banknotes. Members of the public, are, therefore, encouraged to avail of this facility at their convenience within the allotted time.

ABOUT THE AUTHOR

Ketan Sonalkar (SEBI Rgn No INA000011255 )

Ketan Sonalkar is a certified SEBI registered investment advisor and head of research at Univest. He is one of the finest financial trainers, with a track record of having trained more than 2000 people in offline and online models. He serves as a consultant advisor to leading fintech and financial data firms. He has over 15 years of working experience in the finance field. He runs Advisory Services for Direct Equities and Personal Finance Transformation.

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