The Reserve Bank of India has decided to withdraw Rs 2000 Notes from circulation vide its press release 2023-2024/257. RBI has advised banks to stop issuing Rs 2000 denomination banknotes with immediate effect, In Pursuance of the Clean Note Policy. Giving example of 22 Jan,2014 when RBI had withdraws all banknotes issued prior to 2005 after 31 March,2014. From 1 April,2014, the public will be required to approach banks for exchanging these notes. After 1 July,2014 , however to exchange more than 10 notes of Rs.500 and Rs.1000, non customer will have to furnish proof of identity and residence to the bank branch in which she/he wants to exchange the notes.
Reserve Bank of India from time to time withdraw notes in pursuance of the Clean Note Policy. But this time why so much noise on the ground. Lets understand some facts.
The Rs.2000 denomination notes was introduced in November 2016 under Section 24(1) of RBI Act, 1934, Primary to meet the currency requirement for the economy in an expeditious manner after the withdrawal of legal tender status of all Rs.500 and Rs.1000 denomination notes in circulation at that time. Since govt of India have very few printing press in the country and to meet currency requirements of the public in shorter time Rs.2000 denomination notes were printed. About 89% of the Rs.2000 denomination banknotes were issued prior to March,2017. Which means from November,2016 to March,2017 ( 5 Months ). As on 31 March,2018 Approx 6.73 lakh crore value of Rs.2000 Currency was in Circulation, which drop to 3.62 lakh crore value in 31 March,2023.
When we check the demand in ground level even small traders and vendor resist to take Rs.2000 notes due to change problem & Preferred to take through digital medium like PTM, Google pay, UPI etc.
The Reserve Bank of India have requested public to either deposit Rs.2000 denomination banknotes into their bank accounts or exchange of Rs.2000 banknotes into banknotes of other denomination upto a limit of Rs.20000/- at a time at any bank stating from 23 May, 2023. To complete the exercise in a time-bound manner and to provide adequate time to the public.
What will be the impact?
Public
There is no impact of withdrawal of Rs.2000 denomination to general public as there is no hoarding by general Public. There may impact on those person who kept Rs.2000 denomination in Black Money as they will be again in scrutiny by Income tax department when they will approach banks for deposit their money as one can exchange upto Rs. 20000/- only.
Black Money
The impact will be in long run as maximum currency value is Rs.500/- and if someone want to only trade in cash she/he need to carry huge volume which is practically not possible. The risk will be higher due to recent action taken by the BJP Govt. It may possible if digital transaction in its peak they may withdraw its Rs.500 currency in future, Keeping in mind the Risk associated with black-money people will preferred stay away with it in long run.
Corruption
It will helps in curbing high volume corruption as person needs larger area to hide the currency. Moreover the future risk associated with Rs 500 denomination as current government can also withdraw Rs.500 denomination in future to curb in black money.
Economy
India Economy has positive impact as recent action by Govt suggested that Govt wants to minimize black money through various financial and monetary measures. Indian Economy will boost with this decision as people uses more digital transaction due to inconvenience of carrying lower denomination in higher amount.
Role of Banks
Reserve Bank of India in its press note DCM(Plg) No.-S-236/10.27.00/2023-2024 dt 19 May 2023 directed all banks to discontinue issuing Rs 2000 denomination banknotes with immediate effect & all ATM/Cash Recyclers may also be reconfigured according. All Existing Stock of Rs 2000 banknotes shall be sorted immediately through Notes Sorting Machines for accuracy and genuineness and deposited in the currency Chests.
Banks will provide facilities of exchange of Rs 2000 banknotes to all members of the public from 23 May, 2023 up to 30 September, 2023. All banks may exchange Rs.2000 banknotes upto a limit of Rs 20000/- at a time. However one can deposit Rs.2000 banknotes into accounts maintained with all banks in a usual manner, Subject to compliance with Extant Know Your (KYC) norms and other statutory requirements. In case of any unusual transaction, banks shall comply with Cash Transaction Reporting (CTR) and Suspicious Transaction Reporting (STR) requirements.
For unbanked or Rural Area business Correspondents (BCs) may also be allowed to exchange Rs.2000 banknotes upto limit of Rs.4000/- per day for an account holder. The usual limits will apply for Jan Dhan Yojna or Basic Saving Bank Deposit (BSBD) Accounts.
FAQ's
The staff on exchange counter must have copy of Frequently Asked Questions (FAQs) & also display in the banking hall, ATM, Kiosks, etc. The bank may also consider advising their customers suitably. The RBI releases the 15 Frequently Asked Questions on Rs 2000 denomination banknotes which is given below:
Why are Rs.2000 denomination banknotes being withdrawn?
Rs.2000 denomination banknote was introduced in November, 2016 under Section 24(1) of RBI Act, 1934 primarily with the objective to meet the currency requirement of the economy in an expeditious manner after withdrawal of the legal tender status of all Rs.500 and Rs.1000 banknotes in circulation at that time. With fulfilment of that objective and availability of banknotes in other denominations in adequate quantities, printing of Rs.2000 banknotes was stopped in 2018-19. A majority of the Rs.2000 denomination notes were issued prior to March, 2017 and are at the end of their estimated life-span of 4-5 years. 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. 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 Clean Note Policy?
It is a policy adopted by RBI to ensure availability of good quality banknotes to the members of public.
Does the legal tender status of Rs.2000 banknotes remain?
Yes, Rs.2000 banknote will continue to maintain its legal tender status.
Can Rs.2000 banknotes be used for normal transactions?
Yes, Members of the public can continue to use Rs.2000 banknotes for their transactions and also receive them in payment. However, they are encouraged to deposit and/or exchange these banknotes on or before 30 September, 2023.
What should the public do with the Rs.2000 denomination banknotes held by them?
Members of the public may approach bank branches for deposit and/or exchange of Rs.2000 banknotes held by them.
Is there a limit on deposit of Rs.2000 banknotes into a bank account?
The facility for deposit into accounts and exchange for Rs.2000 banknotes will be available at all banks until 30 September, 2023. The facility for exchange will be available also at the 19 Regional Offices (ROs) of RBI having Issue Departments 1 until 30 September, 2023.
Is there a limit on deposit of Rs.2000 banknotes into a bank account?
Deposit into bank accounts can be made without restrictions subject to compliance with extant Know Your Customer (KYC) norms and other applicable statutory/ regulatory requirements.
Is there an operational limit on the amount of Rs.2000 banknotes that can be exchanged?
Members of the public can exchange Rs.2000 banknotes upto to a limit of Rs.20,000/- at a time.
Can Rs.2000 banknotes be exchanged through Business Correspondents (BCs)?
Yes, exchange of Rs.2000 banknotes can be made through BCs upto a limit of Rs.4000/- per day for an account holder.
From which date will the exchange facility be available?
To give time to the banks to make preparatory arrangements, members of the public are requested to approach the bank branches or ROs of RBI from May 23, 2023 for availing exchange facility.
Is it necessary to be a customer of the bank to exchange Rs.2000 banknotes from its branches?
No, A non-account holder also can exchange Rs.2000 banknotes up to a limit of Rs.20,000/- at a time at any bank branch.
What if someone needs more than Rs.20,000/- cash for business or other purposes?
Deposit into accounts can be made without restrictions. The Rs.2000 banknotes can be deposited into bank accounts and cash requirements can be drawn thereafter, against these deposits.
Is there any fee to be paid for the exchange facility?
No, the exchange facility shall be provided free of cost.
Will there be special arrangements for senior citizens, persons with disabilities, etc. for exchange and deposit?
To make the entire process smooth and convenient for the public, a period of over four months has been given for deposit and/or exchange of Rs.2000 banknotes. Members of the public, are therefore, encouraged to avail this facility at their convenience within the allotted time.
What will happen if one cannot deposit/exchange Rs.2000 banknote immediately?
To make the entire process smooth and convenient for the public, a period of over four months has been given for deposit and/or exchange of Rs.2000 banknotes. Members of the public, are therefore, encouraged to avail this facility at their convenience within the allotted time.
What will happen if a bank refuses to exchange/accept deposit of Rs.2000 banknote?
For redress of grievance in case of deficiency of service, the complainant/aggrieved customer may first approach the concerned bank. If the bank does not respond within a period of 30 days after lodging of the complaint or if the complainant is not satisfied with the response/resolution given by the bank, the complainant can lodge the complaint under the Reserve Bank – Integrated Ombudsman Scheme (RB-IOS), 2021 at the Complaint Management System portal of RBI (cms.rbi.org.in).
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