“System has adequate currency notes, no reason to worry”: RBI Governor on move to withdraw Rs 2000 notes

Mumbai: Noting that there is no reason for worry over the move to withdraw Rs 2000 notes, which continue as legal tender, Reserve Bank of India Governor Shaktikanta Das has said the central bank has “more than adequate” notes of other denominations available.

There has been some speculation that the decision to withdraw Rs 2000 note may put a strain on the overall money supply.
“Let me assure you, we have more than an adequate quantity of notes available, already printed. We have more than an adequate quantity of printed notes already available in the system – not just with the RBI but also at the currency chests which are operated by the banks. So, there is adequate stock available and there is no reason to worry,” Das told reporters here.

Speaking about the September 30 deadline exchange of Rs 2000 notes, he said a date was decided so that people take the process seriously and it does not become endless.

“…Time is given up to September 30 (for exchange of notes) so that it is taken seriously, otherwise, if you leave it open-ended, it becomes a kind of an endless process,” Das said in the interaction with the media.

Currency notes of Rs 2000 denomination were primarily issued for the purpose of quickly replenishing the value of money which was being taken out from the system when the legal tender status of then-prevailing Rs 1000 and Rs 500 notes was withdrawn during demonetisation.

“That purpose has been fulfilled. Today there are enough notes in circulation of other denominations,” he said.

The Reserve Bank of India (RBI) on Friday decided to withdraw the Rs 2000 denomination currency notes from circulation, but added they will continue to remain as legal tender.

RBI had advised banks to stop issuing Rs 2000 denomination banknotes with immediate effect.

RBI, however, said that citizens will continue to be able to deposit Rs 2000 banknotes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch up to September 30, 2023.

#WATCH | #Rs2000CurrencyNote | RBI Governor Shaktikanta Das says, “Let me clarify and re-emphasise that it is a part of the currency management operations of the Reserve Bank…For a long time, the Reserve Bank has been following a clean note policy. From time to time, RBI… pic.twitter.com/Rkae1jG0rU

— ANI (@ANI) May 22, 2023

The exchange of Rs 2000 bank notes into notes of other denominations can be made upto a limit of Rs 20,000 at a time at any bank starting from May 23, 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,” RBI said Friday.

RBI said Rs 2000 denomination banknote was introduced in November 2016, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of the legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time.

The objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, the printing of Rs 2000 banknotes was stopped subsequently in 2018-19.

About 89 per cent of the Rs 2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life span of four-five years.

The total value of these banknotes in circulation has declined from Rs 6.73 lakh crore at its peak in March 31, 2018 (37.3 per cent of Notes in Circulation) to Rs 3.62 lakh crore constituting only 10.8 per cent of Notes in Circulation on March 31, 2023.

Meanwhile, the State Bank of India, in a communication shared with all its circles, said no ID cards or requisition forms are needed for the exchange of Rs 2000 currency notes. The customers, however, would be allowed to exchange a maximum of ten currency notes of Rs 2000 at a time.