RBI announces withdrawal of Rs 2,000 notes from circulation, maintains legal tender status; Exchange facility provided

The Reserve Bank of India (RBI) has announced that it will withdraw the circulation of Rs 2,000 currency notes, while still maintaining their status as legal tender. According to the RBI's "Clean Note Policy," all Rs 2,000 banknotes must be exchanged by September 30, 2023. Banks have been instructed to cease issuing the Rs 2,000 denomination notes immediately. To ensure a smooth transition, individuals can exchange these banknotes for lower denominations up to Rs 20,000 at a time, starting from May 23, 2023. The Rs 2,000 note was introduced after the demonetization of Rs 1,000 and old Rs 500 notes in 2016. The RBI ceased printing Rs 2,000 notes in 2018-19, as the objective of their introduction had been accomplished with an adequate supply of other denominations.

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.”