Rs 2000 Note Withdrawn: Why This is Different from Demonetisation

In what has come as an exciting development, the Reserve Bank of India has withdrawn Rs 2000 notes from circulation. The Rs 2000 note was introduced in November 2016 when the legal tender status Rs 500 and Rs 1000 notes were withdrawn as part of the demonetisation exercise. The notes will now be withdrawn from circulation following the Clean Note Policy of RBI.

Why has Rs 2000 Note Been Withdrawn from Circulation?

This decision comes as a part of the RBI's "Clean Note Policy" and is based on the fulfillment of the objective of introducing the ₹2000 denomination in the first place, as well as the availability of banknotes in other denominations in sufficient quantity. The printing of Rs 2000 note had already been stopped during the financial year 2018-19, indicating a shift in the RBI's currency distribution strategy. 

Moreover, a considerable majority of the Rs 2000 notes in circulation were issued prior to March 2017 and have now reached their estimated lifespan. These higher denomination banknotes are no longer commonly used for day-to-day transactions, prompting the decision to withdraw them from circulation.

Why is Rs 2000 Note Withdrawal Different from Demonetisation?

It is important to note that although the 2000 note will be withdrawn from general circulation, they will retain their status as legal tender. This means that individuals can still use these banknotes for making payments or exchanging them for lower denomination currency at any bank or authorized financial institution.

To allow banks sufficient time to make necessary preparations, members of the public have been urged to visit their respective banks or branches starting from 23 May to get their notes exchanged. Public will have time until 30 September 2023 to get their notes exchanged.

How Can Rs 2000 Note be Exchanged?

The facility for deposit or exchange of these banknotes will be available to the public until 30 September 2023. Here are the key points outlined by the RBI:

• Deposits into Bank Accounts: Members of the public can deposit ₹2000 banknotes into their bank accounts in the usual manner, without any restrictions.
• Exchange through Bank Branches: All banks are mandated to provide the facility for the exchange of Rs 2000 note to their customers through their branches.
• Exchange Limit: To minimize inconvenience and ensure operational convenience for bank branches, the exchange of Rs 2000 banknotes is limited to Rs 20,000 at a time.
• Special Arrangements: Banks have been advised by RBI to make special arrangements, to the extent feasible, to reduce inconvenience for senior citizens, persons with disabilities, and women seeking to exchange or deposit Rs 2000 banknotes.