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What happens to your Rs 2,000 notes now? All your queries answered

The Reserve Bank of India has decided to withdraw Rs 2,000 denomination banknotes from circulation and asked all to exchange them by September 30,2023.

The RBI has decided to withdraw Rs. 2,000 denomination bank notes from circulation and set the note exchange deadline on September 30, 2023. As a part of its ‘Clean Note Policy’, the RBI on Friday declared that though this note will no longer be in circulation, it will continue as legal tender.

To complete the exercise in a time-bound manner, the RBI has directed banks to provide deposit and exchange facilities until September 30, 2023, so as to give adequate time to the public. This gradual transition will aid people to convert their legitimate holdings into currency notes of smaller denominations, it said.

Here’s everything you need to know about the Rs. 2000 notes getting phased out, and what you need to do:

    01     What happens next?

    The banknotes in Rs 2000 denomination will continue to be legal tender. The RBI said all banks shall provide deposit and/or exchange facility for Rs 2000 banknotes until September 30, 2023.

    02     Why did RBI withdraw Rs 2000 notes from circulation?

    Explaining the move, the RBI said: “About 89% of the ₹2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years. The total value of these banknotes in circulation has declined from ₹6.73 lakh crore at its peak as on March 31, 2018 (37.3% of Notes in Circulation) to ₹3.62 lakh crore constituting only 10.8% of Notes in Circulation on March 31, 2023. It has also been observed that this denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public.”

    03     How to deposit/exchange Rs 2000 banknotes?

    RBI said members of the public may deposit Rs 2,000 banknotes into their bank accounts or exchange them into banknotes of other denominations at any bank branch. “Deposit into bank accounts can be made in the usual manner, that is, without restrictions and subject to extant instructions and other applicable statutory provisions,” it said.

    The central bank added, “In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of Rs 2000 banknotes into banknotes of other denominations can be made upto a limit of ₹20,000/- at a time at any bank starting from May 23, 2023.” Additionally, the facility for exchange of Rs 2,000 bank notes up to the limit of Rs 20,000 at a time will be provided at the 19 Regional Offices of the RBI having issue departments from May 23.

    04    Why was Rs. 2000 note introduced?

    As banknotes of smaller denominations became readily available, the requirement of Rs. 2000 notes was met and its printing was stopped in 2018-19.

    05    How many Rs 2000 notes are currently in circulation?

    There are approximately 181 crore notes in the denomination of Rs 2000. This amounts to a value of Rs 3.62 lakh crore, constituting about 10.8% of Indian currency notes in circulation. The total value of these notes declined from Rs 6.73 lakh crore which hit its peak on March 31, 2018.

    06     Can the notes be used anywhere after September 30, 2023?

    While the RBI notes says these notes can be exchanged in banks till September 30, 2023, what is not clear is whether they will be legal tender post that. A clarification is expected from RBI as this is the question most people are asking.

    07     Has such withdrawal of notes happened before?

    In 2014, the RBI completely withdrew from circulation all banknotes issued prior to 2005. The January 22, 2014 notification urged public to approach banks for exchanging these notes after April 1. The Reserve Bank had then clarified that notes issued before 2005 will continue to be legal tender.