- Date : 23/05/2023
- Read: 3 mins
RBI's decision to withdraw Rs 2,000 notes has caused panic among the masses. But there's nothing to worry about. Find out why RBI has decided to withdraw it and other important information in this article.
- The RBi has decided to discontinue Rs 2,000 notes
- The note has its roots in the decision of demonetisation made in 2016
- RBI has a few specific reasons for this decision to withdraw
The big brother of Indian currency notes, Rs 2,000, is being withdrawn from the economy, the RBI recently announced. This ends the note’s short stint in our wallets, retired within seven years of its launch. However, if you have the note with you, you need not worry. Rs 2,000 notes will remain legal tender. This decision was taken on 19 May 2023.
You may wonder why it was introduced for such a short period.
Rs 2,000 Notes - The backstory
The Rs 2,000 note came into existence in November 2016, in the aftermath of demonetisation. Demonetisation led to a currency crunch as Rs 500 and Rs 1,000 stopped being legal tender overnight. Introduced under section 24 (1) of the RBI Act, 1934, Rs 2,000 was brought in to meet the sudden currency requirement.
While Rs 2,000 is being discontinued now, its minting was slowed down much earlier. 89% of these notes were minted before March 2017. Considering that the average physical lifespan of a currency note is only four to five years, these notes are already past their prime.
Why is it discontinued?
RBI stated that since demonetisation, other denominations of currencies have become available. Therefore, the printing of Rs 2,000 notes was stopped completely in 2018-19. In other words, the Rs 2,000 note has long served the purpose for which it was introduced.
This move is part of RBI’s currency management system, and people can return the note any time in the next four months. RBI will decide on the course of action if any notes remain unreturned after 30 September 2023. Remedy will also be provided to people who are overseas during this period and are unable to return the notes.
The discontinuation is also part of RBI’s Clean Note Policy. As mentioned, Rs 2,000 notes are an ageing breed, and the issue of soiled notes will remain if these notes are left to continue. The RBI has also asked banks to avoid recycling soiled notes received over the counter and stapling of notes. The apex bank has also asked people to avoid writing on notes.
The exchange facility for Rs 2,000 notes will be operational from 23 May 2023 to 30 September 2023. To this date, the note will also remain legal tender. This is expected to eliminate any unwanted panic among the public.