The Reserve Bank of India (RBI) on Friday announced the withdrawal of ₹2,000 notes from circulation, advised people to exchange or save the notes by September 30, but assured that they would remain legal tender.
The announcement and the deadline, which contradicts assurances that the notes will remain legal tender, have caused an uproar and evoked memories of demonetisation, when the government scrapped high-value notes on hours’ notice in November 2016, although the Reserve Bank of India sought to reiterate that the move was prompted by its so-called “clean notes” policy.
Banks will start exchanging notes from May 23 and people can exchange ₹2,000 notes up to a limit of ₹20,000 at a time. In remote locations, the account holder can get exchange through business correspondents (BCs) up to a limit of ₹4,000 per day, RBI said.
While the FAQ issued by the RBI on Friday said that “members of the public can continue to use ₹2,000 notes for their transactions and also accept them for payment”, it added that “they have been advised to deposit and/or exchange these notes at by September 30, 2023”, the RBI is likely to announce a mechanism for depositing or exchanging notes after the deadline.
The RBI also said that there is no limit for depositing ₹2,000 notes in a bank account, but this may require details like PAN and Aadhaar or other documents. “Deposits to bank accounts can be made without restriction subject to compliance with existing Know Your Customer (KYC) norms and other applicable statutory/regulatory requirements,” it said. Experts said some deposits may require Aadhaar and PAN verification.
The RBI stopped printing ₹2,000 notes about four years ago. Both the central bank and the government argued that the currency of this denomination was a temporary measure to restore the economy’s cash supply after demonetisation.
“The target of introducing ₹2,000 notes was met once notes of other denominations were available in sufficient quantity. Hence, printing of ₹2,000 notes has been stopped in 2018-19,” RBI said in a statement.
According to the central bank, around 89% of the ₹2,000 notes issued before March 2017 are at the end of their estimated lifespan of four to five years, and in line with its “Clean Banknote Policy”, it has decided to withdraw the high denomination notes from circulation. “The Reserve Bank of India has advised banks to stop issuing ₹2,000 notes with immediate effect,” it added in a statement.
written by: Vaishali Verma
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