The Reserve Bank of India on Friday said that it was withdrawing the ₹2000 banknote from circulation in an exercise it says its aims to get completed by September 30. This is being done under its 'Clean Notes Policy', citing the notes' near seven-year lifespan.
In the interim, however, the banknote will continue to be legal tender. This means that the banknote would be able to be used in all transactions.
The public can, however, deposit these notes in their bank account or get it exchanged for fresh one of other denomination.
Depositing them: A holder of these notes can deposit them in their bank account at any bank branch as usual.
Exchanging them: A holder of these notes can also exchange them for notes of other denominations starting May 23. This can be done at any bank branch, but only up to ₹20,000 at a time. Further, this facility is being offered at any of 19 regional branches of the RBI. The same ₹20,000 limit will apply at these offices.
Notes of the 2000 denomination of the current series were introduced post November 8, 2016, after the shock and near overnight withdrawal of the ₹1000 and ₹500; whose announcement came as a televised address by Prime Minister Narendra Modi. The note aimed to quickly remonetise the cash glut in the economy after this demonetisation exercise.
However, recent data has shown that its circulation had already been falling. The release says that at its peak as of March 31, 2018, the notes constituted ₹6.73 lakh crore in value or 37.3% of the notes in circulation. However, this fell to 10.8% of the notes in circulation as of March 31, 2023, valued at ₹3.62 lakh crores.
Have such exercises been undertaken before?
Yes. Antiquated banknotes have been withdrawn like this in the past.
Such as exercise came as recently as 2014. Today's release makes a mention of this exercise.
From April 2014, the RBI said that it would withdraw all notes that had been issued prior to 2005.
Like now, these pre-2005 notes were not stripped of their status as legal tender.
At the time, it was reported that these notes had lesser security features and the exercise would also check the number of fakes.
This can be read here.