Is India back to demonetization of November 2016?
On May 19, 2023, RBI has withdrawn INR 2,000 notes from circulation. But before understanding the withdrawal, let us understand about its introduction.
On November 8, 2016, our Hon’ble Prime Minister (“PM”) Mr. Narender Modi withdrew the legal tender status of INR 1000 and INR 500 notes from the market and introduced new INR 500 and INR 2000 notes to meet the currency requirement of the economy. Accordingly, RBI issued around 89% of INR 2000 denomination banknotes prior to March 2017 with an estimated life span of 4-5 years.
Post issuance, there have been multiple news about reduction in circulation of these notes. RBI stopped the production of these notes in FY 2018-19. Further, its circulation has reduced 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.
Though the denomination would continue to be a legal tender but it has been decided to withdraw the ₹2000 denomination banknotes from circulation. It is to be noted that a similar withdrawal was done by RBI in 2013-2014.
Way forward
People may deposit ₹2000 banknotes into their bank accounts and/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. Further, exchange of ₹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.
To complete the exercise in a time-bound manner and to provide adequate time to the members of public, all banks shall provide deposit and/or exchange facility for ₹2000 banknotes until September 30, 2023.
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