The Reserve Bank of India (RBI) announced that it will withdraw the Rs 2,000 denomination banknote from circulation. However, it will continue as legal tender till September 30. The banknote was initially introduced in November 2016 to meet the currency requirements of the economy after the demonetisation of Rs 500 and Rs 1,000 denomination currencies in circulation. The RBI said that all banks shall provide deposit and/or exchange facility for 2,000 banknotes until September 30, 2023. The RBI will withdraw all the Rs 2,000 banknotes as a part of its clean note policy.
People may deposit Rs 2,000 banknotes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch. Exchange of Rs 2,000 banknotes into notes of other denominations can be made up to a limit of Rs 20,000 at a time at any bank starting from May 23, 2023. To complete the exercise in a time-bound manner and to provide adequate time to the members of the public, all banks shall provide deposit and/or exchange facility for Rs 2,000 banknotes until September 30, 2023.
The facility for exchange of Rs 2,000 banknotes up to the limit of Rs 20,000 at a time shall also be provided at the 19 Regional Offices (ROs) of RBI having Issue Departments, from May 23. The RBI said that the objective of introducing Rs 2,000 banknotes was met once banknotes in other denominations became available in adequate quantities. Printing of Rs 2,000 banknotes was stopped in 2018-19.
The RBI said that 89 per cent of the Rs 2,000 denomination notes have reached their life cycle end as they were issued prior to March 2017. The total value of these banknotes in circulation has declined from Rs 6.73 lakh crore at its peak as on March 31, 2018 (37.3 per cent of notes in circulation) to Rs 3.62 lakh crore constituting only 10.8 per cent of notes in circulation on March 31. 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 requirements of the public, the RBI said.
The withdrawal of Rs 2,000 rupee notes is an expected and timely move towards prudent currency management within the realm of maintaining banking and financial discipline. Such measures further reduce/ eliminate the probable cash component in high-value real estate transactions. In the last few years, RERA and demonetisation have brought in significant levels of transparency in real estate, mainly contributing to fair market price determination.
