Explainer: Why Is RBI Withdrawing Rs 2000 Banknotes From Circulation? | Personal Finance News

New Delhi: Reserve Bank of India (RBI) announced on Friday in its circular that it will start withdrawing Rs 2000 denomination notes from circulation from May 23, 2023. It is a part of RBI’s Clean Note Policy to ensure availability of good quality  banknotes to the members of public.

The 2000 banknote will continue to maintain its legal tender status until September 30, 2023. Thereafter, it will cease to remain legal tender. RBI has requested banks to start deposit or exchange facility of Rs 2000 notes for customers from May 23, 2023.

Why Are ₹2000 denomination banknotes being withdrawn?

Explaining the reason behind the surprise step, RBI stated, “The ₹2000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934 primarily with the objective to meet the currency requirement of the economy in an expeditious manner after withdrawal of the legal tender status of all ₹500 and ₹1000 banknotes in circulation at that time. With fulfilment of that objective and availability of banknotes in other denominations in adequate quantities, printing of ₹2000 banknotes was stopped in 2018-19. A majority of the ₹2000 denomination notes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years. It has also been observed that this denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations continue to be adequate to meet the currency requirement of the public.”

What should the public do with the ₹2000 denomination banknotes held by them?

Members of the public may approach bank branches for deposit and/or exchange of ₹2000 banknotes held by them.

The facility for deposit into accounts and exchange for ₹2000 banknotes will be available at all banks until September 30, 2023. The facility for exchange will be available also at the 19 Regional Offices (ROs) of RBI having Issue Departments1 until September 30, 2023.

Is there any fee to be paid for the exchange facility?

No. The exchange facility shall be provided free of cost.

Will there be special arrangements for senior citizens, persons with disabilities, etc. for exchange and deposit?

Banks have been instructed to make arrangements to reduce inconvenience to the senior citizens, persons with disabilities, etc., seeking to exchange/deposit ₹2000 banknotes.

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