Deepak Gupta | May 19, 2023 |
Why Rs 2,000 notes withdrawn from circulation by RBI
The Reserve Bank of India (RBI) announced on Friday that it would stop issuing currency notes of Rs 2,000. However, according to a press release from the Reserve bank of India, the notes will still be accepted as legal tender.
As per RBI Press Release the Rs. 2000 denomination banknote was introduced in Nov, 2016 to meet the currency requirement of the economy after the withdrawal of Rs. 500 and Rs. 1000 banknotes. However, the printing of Rs. 2000 banknotes was stopped in 2018-19 as banknotes in other denominations became available in adequate quantities.
Let us understand Why Rs 2,000 notes withdrawn from circulation by RBI
The 2000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934 primarily with the objective to meet the currency requirement of the economy in an expeditious manner after withdrawal of the legal tender status of all Rs. 500 and Rs. 1000 banknotes in circulation at that time. With fulfilment of that objective and availability of banknotes in other denominations in adequate quantities, printing of Rs 2000 banknotes was stopped in 2018-19. A majority of the Rs 2000 denomination notes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years. It has also been observed that this denomination is not commonly used for transactions.
As per RBI Press Release total value of Rs. 2000 banknotes in circulation has declined from Rs. 6.73 lakh crore at its peak as on March 31, 2018 (37.3% of Notes in Circulation) to Rs 3.62 lakh crore constituting only 10.8% of Notes in Circulation on March 31, 2023. Additionally, it has been noted that transactions involving Rs. 2000 Notes denominations are uncommon. Additionally, the supply of banknotes in other denominations is still sufficient to meet the public’s demand for currency.
According to RBI Press Release in pursuance of the “Clean Note Policy” of the Reserve Bank of India, it has been decided to withdraw the Rs. 2000 denomination banknotes from circulation. However, the banknotes in Rs. 2000 denomination will continue to be legal tender and can be deposited in banks or exchanged at RBI offices till September 30, 2023.
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