Recently on 19th May 2023, the Reserve Bank of India released a circular regarding the withdrawal of the Rs. 2000 banknote. It is withdrawing all the banknotes of Rs. 2000 denomination from circulation. The RBI planned this move earlier and stopped printing these notes in 2019. It prescribed detailed guidelines and respective timelines for the general public to deposit and exchange the 2000 rupee note in the circular. While the banks are notified in a separate circular to undertake the activities required for such withdrawals and the procedure for exchanging these denominations.

Reasons for Introducing the 2000 Rupee Note

The Reserve Bank of India introduced Rs. 2000 note as a new denomination of Indian currency in 2016. The reason for the issue of such a high-value banknote was to fulfil the currency requirement in the economy after the demonetisation. In 2016, the central Government of India called for demonetisation by withdrawing the legal tender of Rs. 500 and Rs. 1000 notes. Because of this sudden decision and subsequent announcement, the population queued up before the banks to exchange their old notes. It created a lot of disruption across the country. At that time 2000 rupee note came to the rescue and expeditiously fulfilled the demand for new notes in the market.

Reasons for Withdrawing the 2000 Rupee Note

The RBI cited various reasons to justify their move of withdrawing the 2000 rupee note from circulation. It stopped printing these notes in 2018-2019. The major point of such withdrawal is that they have fulfilled the object they were released for and now they have no purpose to fulfil. The other reasons why the 2000 rupee withdrawn are as follows-

• They have completed their life span of four to five years.
• The move is in pursuance of the Clean Note Policy of the Reserve Bank of India.
• The RBI has observed that this note is not commonly used for transactions.
• The other denominations of Indian currency are adequate for the financial requirements of the general public.

What is the Clean Note Policy?

The Reserve Bank of India drafted the Clean Note Policy. The object of this policy is to remove bad notes from the circulation. Usually the general public deposit these bad notes in the banks. The banks further transfer this cash to the reserve bank and do not issue it again in circulation. The policy prohibits everyone from the following activities-

• Stapling on currency notes
• Scribbling on currency notes
• Use of notes for showering on personalities
• Use of notes for decoration purposes

The RBI is citing that the current move is in pursuance of the clean note policy. A portion of the 2000 note may have been defaced, scribbled, and stapled which caused its circulation to drop from 37.3 per cent in 2018 to 10.8 in 2023. Also, it is reaching its life span of 4 - 5 years so general wear and tear also makes it unfit for circulation now.

Is the 2000 Rupee Note Still Valid?

Yes, 2000 rupee notes are still valid and continue to be legal tender. You can use them for transactions till the 30th of September 2023. Alternatively, you can also deposit them in your bank account or exchange them from the banks into a different denomination. The facility to exchange these 2000 rupee note will also be available at the regional offices of the Reserve Bank of India.

If you possess any 2000 rupee note, it's safe to deposit them in your bank account or you can exchange them hand to hand into another denomination.

Exchange Facility Limits for 2000 Rupee Note

Although the exchange facility for the 2000 rupee note will be provided at all the bank branches, there is a per-day limit on such exchange. The Reserve Bank of India has prescribed that the members of the public will be able to exchange only twenty thousand rupees at a time. It means that you can only exchange ten 2000 rupee note at a time after 2000 rupee withdrawn. If you have a 2000 rupee note in cash worth more than twenty thousand then you need to visit the bank branch multiple times to exchange all that money. The RBI has incurred this limit for the purpose of ensuring regular bank activities during the exchange and avoiding any operational inconvenience. This limit will allow more members of the public to avail of the service in a single day.

Deposit Limits For 2000 Rupee Note

The members of the public can also deposit the 2000 rupee note if they do not need the cash immediately. The circular published by the Reserve Bank of India does not prescribe any limit or restriction on the deposits of 2000 rupee note. You can deposit as usual to your bank account. These deposits shall be subject to any other instructions and statutory provisions. Due to this reason, deposits are a better alternative to go for if you have more than twenty thousand of cash in 2000 rupee note denominations. It will allow you to deposit all of it in one instance on the same day.

Deadline to Exchange or Deposit the 2000 Rupee Note

To provide adequate time to the general public and complete the process of withdrawal systematically, RBI prescribed a four-month period for the exchange and deposit of the 2000 note. The circular prescribed the members of the public to exchange 2000 rupee note from 23rd May 2023 (Tuesday) to 30th September 2023 (Saturday). The facility to exchange these notes into different denominations is available at all bank branches and the regional offices of the Reserve Bank of India. The RBI has nineteen regional branches across the country. The address to these 19 RBI branches is given below-

Conclusion

In 2013-2014 also, the Reserve Bank of India undertook a similar step. It had withdrawn all the currency of 2005 and earlier at that time. The move was to eliminate the currency that had fewer security features from the market as the more advanced and secure currency of all denominations was already in circulation. The current withdrawal of the 2000 rupee note will not impact much as the other denominations are adequately available and preferably used by the general public. The people also adopted digital methods of payment after the demonetisation of 2016. So alternative ways of transactions are available in case there is a lack of cash.

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