Explained: Everything To Know About RBI’s Decision To Withdraw ₹2000 Note From Circulation?

On 19 May, the Reserve Bank of India (RBI) announced that it has decided to withdraw ₹2000 currency notes from circulation. What many have dubbed as “Demonetisation 2.0”, the decision has sparked a mixture of excitement, humor, and uncertainty among the public.

In this article, we will explore the actual decision made by the RBI and the reasoning behind this move. We also examine what will happen to the existing ₹2,000 notes.

What is the decision?

The RBI has decided to withdraw the ₹2000 denomination banknote from circulation. The RBI circular advised banks to stop issuing ₹2000 banknotes with immediate effect.

However, it will still be considered as legal tender. This means that you can exchange or deposit these notes within the specified timelines. 

According to the RBI, the decision decide to withdraw ₹2000 notes from circulation was taken as per the ‘Clean Note Policy.’

Why is ₹2000 note being discontinued? 

The ₹2,000 currency note was introduced in November 2016 after the historic decision of demonetization. 

The goal of ₹2,000 currency note was to quickly provide enough currency to meet the needs of the economy during that time.

However, as time passed, enough notes of other denominations were made available, and the printing of ₹2,000 notes was stopped in 2018-19.

About 89% of the ₹2,000 notes were issued before March 2017, which means they are nearing the end of their expected lifespan of 4-5 years. There are sufficient stocks of banknotes in other denominations for transactions.

Since the objective of introducing the ₹2,000 note has been fulfilled, and there are enough other denominations available, the RBI has decided to withdraw the ₹2,000 notes from circulation. 

Will ₹2,000 banknotes be in use? 

The legal tender status of the ₹2,000 banknotes will remain intact. You can continue to use ₹2,000 banknotes for regular transactions and accept them as payment. 

However, it is recommended to deposit or exchange ₹2,000 banknotes by 30 September 2023.

You can deposit or exchange them into lower denomination notes at any bank branch. All banks will provide the facility to deposit or exchange ₹2,000 banknotes from 23 May. 

What is the limit on depositing ₹2000 banknotes?

There is no specific limit imposed on the deposit of ₹2,000 banknotes into a bank account. You can deposit these banknotes into your accounts without any restrictions, as long as they follow the existing Know Your Customer (KYC) norms and other relevant statutory or regulatory requirements.

What is the limit on exchanging ₹2000 banknotes?

There is a limit on the exchange of ₹2000 banknotes. You can only exchange up to a maximum limit of ₹20,000 in a single transaction.

This means that you can exchange maximum of 10 notes of ₹2,000 for lower denomination notes (500, 200, 100, 50, etc.) per transaction. If the total value of the ₹2,000 banknotes exceeds this limit, multiple transactions can be conducted to complete the exchange.

NOTE: You are allowed to deposit any amount of ₹2,000 banknotes into your bank account without restrictions. However, when it comes to exchanging them for other denominations, you can exchange ₹2,000 banknotes up to a maximum value of ₹20,000 in a single transaction.

What if ₹2,000 banknotes are not submitted before 30 September?

As of now, there is no official guidance regarding what will happen if 2000 banknotes are not exchanged or deposited before 30 September. 

The RBI may issue additional guidelines or provide instructions regarding ₹2,000 banknotes that have not been exchanged or deposited by the specified deadline.

However, ANI quoted people familiar with the matter saying ₹2,000 banknotes may maintain their legal tender status even after 30 September.

The central bank believes that four-month time is enough to deposit/exchange these notes at banks. It highly encourages people to deposit or exchange their ₹2,000 banknotes before 30 September.

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