The Rs. 2000 denomination banknotes are being withdrawn from circulation as decided by the Reserve Bank of India. However, the central bank announced that the existing notes shall continue to be legal tender.
What to do?
People can give and receive Rs. 2000 banknotes for transactions. The RBI still said, However, they are encouraged to deposit and/ or exchange these banknotes on or before September 30, 2023.
The central bank has asked people to approach bank branches for deposit and/ or exchange of the Rs. 2000 banknotes. The RBI added, The facility for deposit into accounts and exchange for Rs 2000 banknotes will be available at all banks until September 30, 2023.
The exchange facility shall be available at 19 RBI Regional Offices with Issue Departments as well until 30thSeptember 2023. There is no clarification though on what would happen if people still have Rs. 2000 banknotes in their possession after 30thSeptember 2023.
Reason
The Rs. 2000 banknote was introduced under Section 24(1) of the RBI Act, 1934 in November 2016. The objective was to quickly meet the currency requirement of the economy after the legal tender status of Rs. 1000 and Rs. 500 banknotes were withdrawn during the demonetization drive.
However, the printing of Rs. 2000 banknotes stopped in 2018-2019 once the objective was fulfilled and banknotes of other denominations were available in sufficient quantities. Moreover, these notes are not frequently used for transactions any longer.
Most of the Rs. 2000 banknotes were issued before March 2017. Thus, the Rs. 2000 banknotes introduced till now have either completed their estimated lifespan of 4-5 years or are at the end of it.
The RBI said, In view of the above, and in pursuance of the Clean Note Policy of the Reserve Bank of India, it has been decided to withdraw the Rs 2000 denomination banknotes from circulation.
What is the Clean Note Policy?
This policy intends to give good-quality currency notes and coins with better security features to the public. In the meantime, the soiled notes are withdrawn. The RBI earlier decided to withdraw all banknotes issued before 2005 since they possess fewer security features in comparison to banknotes printed after 2005. However, the notes continue to be legal tender.
They are withdrawn from circulation according to the standard international practice which is not to have banknotes of various series in circulation at any particular point in time.
Limit on deposit or exchange
You can exchange the notes up to a limit of Rs. 20,000 at a time. You may or may not have an account in the bank you are going to. For deposits, the RBI said it can be done without restrictions subject to compliance with extant Know Your Customer (KYC) norms and other applicable statutory / regulatory requirements.
The exchange can be done through business correspondents for account holders up to a limit of Rs. 4000 per day.