Demonetisation 2.0? Why RBI withdrawing Rs 2,000 notes is not like 2016 note ban

By India Today Business DeskThe Reserve Bank of India (RBI) on Friday announced its decision to withdraw Rs 2,000 denomination currency notes from circulation. However, the notes will continue as legal tender, the central bank said in a press release on Friday.

The Rs 2,000 denomination currency note was introduced in November 2016 under Section 24(1) of the RBI Act, 1934 primarily with the objective of meeting the currency requirements of the economy in an expeditious manner after the withdrawal of the legal tender status of all Rs 500 and Rs 1,000 notes in circulation at that time, the press release said.

The printing of Rs 2,000 notes was stopped in 2018-19.

REASON BEHIND RS 2,000 WITHDRAWAL

One of the reasons why the RBI has withdrawn Rs 2,000 denomination bank notes from circulation is because the denomination is not commonly used for transactions by the public. The RBI said that the value of these notes has declined over the years and constitutes only 10.8 per cent of the notes in circulation as of March 31, 2023.

ALSO READ | Rs 2,000 notes withdrawn from circulation, read what RBI has to say

Another reason is that the stock of other denominations of bank notes is enough to meet the people’s requirements. The RBI also said that this decision is in pursuance of the “Clean Note Policy” – a policy to ensure the availability of good quality notes to the members of the public.

NOT LIKE 2016 NOTE BAN

Unlike in 2016, when all Rs 500 and Rs 1,000 denomination notes were demonetised, and therefore couldn’t be used as legal tender, the notes in the Rs 2,000 denomination will continue to be legal tender.

In its press release, the RBI said that people can deposit their Rs 2,000 notes into their bank accounts and exchange them for notes of other denominations from May 23.