Why did RBI withdraw the 2000 Rupee note?

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Demonetization resulted in the use of Rs 500 and Rs 1,000 notes being prohibited, currency notes of Rs 2,000 were launched in November 2016 under Section 24(1) of The RBI Act, 1934, primarily with the objective of fulfilling the currency requirement of the economy after the legal tender status of Rs 500 and Rs 1000 notes to use was completely stopped. With the fulfilment of that objective, and once notes of other denominations were available in appropriate quantities, the printing of Rs 2000 notes was put on hold in 2018-19. The RBI after speculating for years observed that ₹2,000 denomination is not commonly used by the masses for their day-to-day activities and the stock of other denomination notes are enough to meet the needs of the people.

The decision came into effect on Friday under the “Clean Note Policy” of the central bank to ensure the availability of good quality notes to the public. Another reason which was added by RBI is that the value of these notes has declined over the period of time and at present only constitute 10.8% of the notes in circulation as of March 31, 2023. The 2000 Rupees notes will continue to serve as a legal tender which implies a consumer can purchase goods using the currency. The process of deposit or exchange will be initiated from 23^rd of May, 2023. Banks are humbly requested to stop issuing Rs 2000 denomination banknotes immediately by the RBI.

How can people exchange or deposit their 2000 Rupee notes?

The central bank has advised the public to deposit the notes at nearby bank branches in their respective bank account. To make it convenient for the masses a facility for exchange will also be available until the given date. You only allowed to exchange up to rupees 20,000 which is equal to ten ₹2000 notes. The facility for exchange will be available also at the 19 Regional Offices (ROs) of RBI having Issue Departments.

What are the deadlines for exchanging or depositing 2000 Rupee notes?

The Reserve Bank of India has decided to stop the circulation of Rupees 2000 note in the country with exception that the current notes can still be used as a legal tender before 30^th of September. Citizens can utilize the time to deposit or exchange the INR 2,000 banknotes.

What are the penalties for not exchanging or depositing 2000 Rupee notes by the deadline?

The RBI has not yet clarified what will happen to these notes after September 30. However, the government has stated that until then, its directives will apply to Rs 2000 notes. It would be better to follow the guidelines given by the RBI to ensure smooth stoppage of Rupees 2000 note in the nation.

What are the benefits of RBI withdrawing the 2000 Rupee note?

RBI has taken the decision to withdraw the circulation of 2000 Rupee note under the “Clean Note Policy”. The printing of ₹2,000 banknotes had come to pause back in 2018-2019. RBI stated that it was vital to ensure the availability of good quality notes to the public. To maintain the currency structure and improve the availability of lower denomination notes, the RBI has taken this decision.

What is the future of the 2000 Rupee note?

The total value of these banknotes in circulation has decreased from its peak of 6.73 lakh crore as of March 31, 2018 (37.3% of Notes in Circulation) to its lowest point of 3.62 lakh crore as of March 31, 2023, which represents only 10.8% of Notes in Circulation.