The Reserve Bank of India (RBI), the country’s central bank, issued a circular on Friday withdrawing INR2,000 denomination banknotes from circulation.
The notes will continue as legal tender in India, but the RBI has advised banks to stop issuing INR2,000 banknotes and that the notes must be exchanged before September 30 this year.
The INR2,000 banknote was introduced in November 2016 when the Indian government withdrew the legal tender status of all INR500 and INR1,000 banknotes overnight.
Indian banknote withdrawn
In the circular, the RBI said: “The objective of introducing INR2,000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, printing of INR2,000 banknotes was stopped in 2018-19.”
The RBI added that about 89 per cent of the INR2,000 banknotes were issued prior to March 2017 and are at the end of their estimated lifespan of four to five years.
The total value of these banknotes in circulation has declined from its peak on March 31, 2018, when it constituted 37.3 per cent of total notes in circulation, to only 10.8 per cent in circulation on March 31, 2023.
“It has also been observed that this denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public,” the RBI added.
The general public will be able to deposit INR2,000 banknotes into their bank accounts, or exchange them into banknotes of other denominations at any branch.
Deposit into bank accounts can be made without any restrictions, but exchange into banknotes of other denominations can only be made up to INR20,000 in a single transaction starting May 23.
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