The Reserve Bank of India decided to withdraw Rs 2,000 notes from circulation and said it was done under the central bank’s clean note policy. Here’s all about the clean note policy.
By India Today Business DeskThe Reserve Bank of India, while announcing the withdrawal of Rs 2,000 notes from circulation on Friday, said it is being done under the “clean note policy”.
The clean note policy was adopted by the RBI to ensure the availability of good quality banknotes to the public. The policy aims to maintain the integrity of the Indian currency by removing damaged, counterfeit, or soiled notes from circulation.
Under the clean note policy, banks and financial institutions are required to withdraw unfit or damaged notes from circulation and replace them with new ones. The RBI regularly monitors the quality of currency notes in circulation and sets standards for their acceptability.
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In December 2013, the RBI issued a statement as part of its clean note policy asking banks to exchange soiled notes of even non-customers and issue only good quality clean notes to the public.
As for the Rs 2,000 notes, the RBI started printing them in 2016 after the demonetisation of Rs 1,000 and Rs 500 notes. The objective was met once banknotes in other denominations became available in adequate quantities.
Therefore, printing of Rs 2,000 banknotes was stopped in 2018-19, the central bank said.
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“About 89 per cent of the Rs 2,000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated lifespan of four-five years. The total value of these banknotes in circulation declined from Rs 6.73 lakh crore at its peak on March 31, 2018 (37.3 per cent of notes in circulation) to Rs 3.62 lakh crore constituting only 10.8 per cent of notes in circulation on March 31, 2023,” the RBI said.
On Friday, the RBI asked all banks to stop issuing Rs 2,000 notes. People can deposit or exchange lower denomination notes from May 23 till September 30 for up to Rs 20,000 at a time.
The RBI had undertaken a similar withdrawal of notes from circulation in 2013-2014.
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