Withdrawal of ₹2000 Banknotes from Circulation; Legal Tender Status Continues

The ₹2000 banknote, which was introduced in November 2016, will no longer be in circulation. However, it will continue to be accepted as legal tender. This decision was made by the Reserve Bank of India (RBI) to ensure the smooth functioning of the economy and promote the use of other denominations.

Around 89% of the ₹2000 banknotes were issued before March 2017 and have now reached the end of their estimated lifespan of 4-5 years. The total value of these banknotes in circulation has decreased from ₹6.73 lakh crore to ₹3.62 lakh crore as of March 31, 2023. It has also been observed that people do not commonly use the ₹2000 denomination for transactions. Moreover, there are enough banknotes of other denominations available to meet the public’s currency needs.

To adhere to the “Clean Note Policy” of the RBI, the decision has been made to withdraw the ₹2000 banknotes from circulation. However, it’s important to note that these banknotes will remain legal tender. This means that people can still use them to make payments or exchange them for banknotes of other denominations at any bank branch.

The RBI had previously implemented a similar withdrawal of notes from circulation in 2013-2014. The purpose of this exercise is to ensure that the currency system remains efficient and to encourage the use of various denominations.

To facilitate the withdrawal process, members of the public can deposit their ₹2000 banknotes into their bank accounts or exchange them for other denominations at any bank branch. Deposits can be made as per the usual procedure, without any restrictions, and subject to existing guidelines and applicable laws.

For the convenience of bank branches and to minimize disruption to regular activities, the exchange of ₹2000 banknotes for other denominations will be limited to ₹20,000 at a time, starting from May 23, 2023. This limit will apply to all banks. The RBI has issued separate guidelines to ensure a smooth transition.

To ensure that everyone has enough time to deposit or exchange their ₹2000 banknotes, banks will provide these services until September 30, 2023. In addition to bank branches, the 19 Regional Offices of the RBI with Issue Departments will also offer the facility for exchange up to ₹20,000 at a time, starting from May 23, 2023.

Banks have been instructed to discontinue the issuance of ₹2000 banknotes immediately. It is important for the public to utilize the time available until September 30, 2023, to deposit or exchange their ₹2000 banknotes. The RBI has published a document with Frequently Asked Questions (FAQs) on its website to provide information and assist the public during this process.

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