RBI withdraws Rs 2,000 notes from circulation, sets deadline for exchange or deposit
The Reserve Bank of India (RBI) has made a significant announcement, stating that it will be withdrawing the highest denomination currency note, the Rs 2,000 note, from circulation. While the notes will remain legal tender, the RBI has set a deadline for the exchange or deposit of existing Rs 2,000 notes in banks until September 30. However, there is a limit of Rs 20,000 for each transaction.
To ensure a smooth transition, the central bank has advised the public to deposit the Rs 2,000 notes into their bank accounts or exchange them for other denominations at any bank branch. Additionally, the RBI has instructed banks to cease the issuance of Rs 2,000 notes immediately.
From May 23, individuals will be able to exchange Rs 2,000 notes at any bank, with a transaction limit of Rs 20,000 at a time. In order to accommodate the public and complete this process efficiently, all banks will offer deposit and exchange services for Rs 2,000 notes until September 30, 2023.
Depositing the Rs 2,000 notes into bank accounts can be done without any restrictions, following the usual procedure and complying with relevant guidelines and statutory provisions, according to the RBI.
Moreover, the RBI’s 19 regional offices with issue departments will also provide the facility for the exchange of Rs 2,000 notes up to the limit of Rs 20,000 at a time, starting from May 23.
Responding to inquiries from the media, a high-ranking official from the Reserve Bank of India clarified that this move is a routine exercise and comparable to the government’s withdrawal of currency notes printed before 2005 in 2013-2014. The official emphasized that similar actions are taken by other countries, including the United States, from time to time.
Financial experts are viewing the RBI’s decision to withdraw the Rs 2,000 notes from circulation as a strategic move to combat widespread corruption, particularly in states of India that are not governed by the ruling Bharatiya Janata Party (BJP). These experts believe that the high-value notes have been frequently used for illicit activities such as money laundering and bribery, which undermine the country’s financial integrity.
By phasing out the Rs 2,000 notes, the RBI aims to disrupt the black economy and curb the flow of illicit funds in regions where corruption has been a persistent challenge. This move is seen as part of the government’s broader efforts to promote transparency and accountability in financial transactions across the country.