Why were Rs 2,000 notes withdrawn from circulation by RBI
The Reserve Bank of India (RBI) announced on Friday that it will cease issuing forex notes of Rs 2,000. However, by a press launch from the Reserve bank of India, the notes will nonetheless be accepted as legal tender.
As per RBI Press Release the Rs. 2000 denomination banknote was launched in Nov 2016 to satisfy the forex requirement of the economic system after the withdrawal of Rs. 500 and Rs. 1000 banknotes. However, the printing of Rs. 2000 banknotes was stopped in 2018-19 as banknotes in different denominations grew to become obtainable in ample quantities.
Let us understand Why Rs 2,000 notes were withdrawn from circulation by RBI
The 2000 denomination banknote was launched in November 2016 under Section 24(1) of the RBI Act, 1934 primarily with the target to satisfy the currency requirement of the economy in an expeditious method after withdrawal of the authorized tender standing of all Rs. 500 and Rs. 1000 banknotes in circulation at the moment. With the fulfilment of that goal and the availability of banknotes in different denominations in ample portions, the printing of Rs 2000 banknotes was stopped in 2018-19. A majority of the Rs 2000 denomination notes had been issued previous to March 2017 and are at the end of their estimated lifespan of 4-5 years. It has additionally been noticed that this denomination will not be generally used for transactions.
As per RBI Press Release complete worth of Rs. 2000 banknotes in circulation has declined from Rs. 6.73 lakh crore at its peak of March 31, 2018 (37.3% of Notes in Circulation) to Rs 3.62 lakh crore constituting solely 10.8% of Notes in Circulation on March 31, 2023. Additionally, it has been famous that transactions involving Rs. 2000 Notes denominations are unusual. Additionally, the availability of banknotes in different denominations remains to be enough to satisfy the public’s demand for forex.
According to RBI Press Release in pursuance of the “Clean Note Policy” of the Reserve Bank of India, it has been determined to withdraw the Rs. 2000 denomination banknotes from circulation. However, the banknotes in Rs. 2000 denomination will proceed to be authorized tender and might be deposited in banks or exchanged at RBI offices till September 30, 2023.