RBI Announced the Withdrawal of Rs 2000 denominations

On 20th May 2023, RBI (Reserve Bank of India) announced the withdrawal of Rs 2000 notes but will still remain as legal tender. RBI has advised banks to stop issuing Rs 2000 notes denominations. These notes were introduced after the demonetization of 8th Nov 2016. Actually, the printing of Rs 2000 notes was stopped in the year 2018-19.

The objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities.

--RBI

According to RBI Act, 1934, Sec-24, Rs 2000 notes were introduced in the market and Rs 500-1000 notes were withdrawn. As per RBI the maximum number of Rs 2000, notes were printed in between Nov. 2016 - Mar. 2017, but there was a sharp decline in the printing of these notes in the past few years.

• Around Rs 6.70 Lakh Crore of Rs 2000 notes were printed in the year 2018 which reduced to Rs 3.60 Lakh crore of Rs 2000 note in the year 2023.
• It has been observed that Rs 2000 notes are not the most commonly used notes, and since their requirement has been fulfilled in the economy after demonetization, these notes have been withdrawn.

CIRCULATION FROM RBI

• The public can deposit Rs 2000 notes in their bank accounts or exchange them for other denominations. For E.g. If you have one 2000 rupee note then you will get four 500 rupee notes in return.
• Moreover, the maximum limit for note exchange is Rs 20,000 which means, at a time, ten 2000 rupee notes can be exchanged.
• If someone is having a huge number of Rs 2000 notes, then also they can exchange the notes on the same day. There is no limit imposed by RBI on the note exchange process for one day.
• Note Exchange process starts on 23rd May 2023 and the last date is 30th Sept. 2023.

KeyNotes

• Withdrawal of Rs 2000 notes is not a demonetization, there is nothing to panic.
• 2000 Rs note was introduced for the first time in the market in 2016 after demonetization. So, adequate bank notes can flow and maintain the liquidity of the market.
• Rs 2000 note is still legal tender which means you will get a value worth of Rs 2000 anywhere in India. For E.g. a shopkeeper can't deny accepting a Rs 2000 note if you want to buy something of that equivalent value.
• Nowadays public is more inclined towards digitalization which fosters the UPI mode of payment. So, the withdrawal of Rs 2000 notes will not have an adverse impact on the Indian Economy.
• After demonetization, there were a lot of Rs 2000 notes flowing into the market. So, withdrawing them will act as a counterfeit to black money.
• After the 2016 demonetization, there was a glut of fake Rs 2000 notes. So, RBI introduced its Clean Note Policy to withdraw Rs 2000 notes from the market.

CONCLUSION:

Since Rs 2000 notes are still legal tender, there is nothing to panic regarding their worth. Till now, only 10.8% of Rs 2000 notes that is 3.62 Lakh crore was flowing in the market, So, it doesn't have a major adverse impact on the Indian economy. Before 2016, Around 86% of the Indian Economy was all about only Rs 500-1000 notes.

Till now, RBI has declared they will help those who are living abroad in note-exchange or deposit process. However, In the case, that Rs 2000 notes are not exchanged or deposited, RBI may take strict actions to ensure compliance or can declare this note as an illegal tender.