Rs 2000 notes go out of circulation, people can deposit till Sept. 30

MUMBAI: The Reserve Bank of India (RBI) on Friday withdrew Rs 2,000 currency notes from circulation but said that they will continue to remain as the legal tender. The central bank has advised banks to stop issuing Rs 2,000 denomination banknotes with immediate effect.

According to the RBI, you can deposit or exchange for lower denomination notes till September 30 for up to Rs 20,000 at a time. The RBI’s 19 regional
offices and other banks will start taking Rs 2,000 notes for exchange with lower denomination notes from May 23.

“In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of Rs 2,000 banknotes into banknotes of other denominations can be made upto a limit of Rs 20,000 at a time at any bank starting from May 23, 2023,” said the RBI.

With this notification, RBI ordered banks to stop issuing Rs 2,000 notes to public with immediate effect.

As it continues to be the legal tender, RBI, however, said people can also buy goods and services till September 30.

As on March 31, 2023, Rs 3.62 lakh crore constituting 10.8 per cent of total notes in circulation are in the form of Rs 2000 notes. By September 30, people have to exchange Rs 3.62 lakh crore worth Rs 2000 notes with the notes of other denomination.

"Deposit into bank accounts can be made in the usual manner, that is, without restrictions and subject to extant instructions and other applicable statutory provisions," the RBI statement said.

"The objective of introducing Rs 2,000 banknotes 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 RBI started printing the Rs 2,000 note in November 2016 after Prime Minister Narendra Modi scrapped high-value Rs 1,000 and Rs 500 notes overnight.

Karthik Srinivasan, senior vice-president, group head, financial sector ratings, ICRA, said, “As witnessed during demonetisation, we expect the deposit accretion of banks could improve marginally in near term. This will ease the the pressure on deposit rates hikes and could also result in moderation in short-term interest rates."