No, ₹500 isn’t going anywhere: Here’s what we know about the RBI’s cash move

Amid speculation, the ₹500 note remains legal tender, with no official move to withdraw it, as India ramps up digital payments and prioritizes lower-denomination currency. 

The Reserve Bank of India has clarified recent ATM-related directives are aimed at improving access to small notes.

Despite a wave of online rumors, there is no ban or official plan to withdraw the ₹500 note. The Reserve Bank of India has not issued any directive to demonetize it. The note remains valid and continues to be used nationwide for all transactions.

Confusion emerged after the RBI instructed banks and ATM operators to increase the availability of ₹100 and ₹200 notes. The move, however, was intended to address public complaints over the lack of small change, not to phase out the ₹500 denomination.

Sources said that the social media claims to this effect were fake, adding that there is no such proposal before the RBI. The sources pointed out that lower denomination currency notes will imply that many more currency notes will have to be printed, distributed and the cost of replenishment at ATMs would zoom.

New ₹500 notes in the Mahatma Gandhi (New) Series are still being printed and circulated, underscoring the RBI’s continued use of the denomination. While policymakers are working to reduce reliance on high-value notes in the long term, there is no timeline or directive to withdraw the ₹500 note.

Union Finance Minister Nirmala Sitharaman echoed this shift in approach during a seminar in New Delhi. “We are making every effort to make sure that currency will be in the lower denominations, used much more than the higher,” she said.

She also confirmed that the ₹2,000 note is effectively out of circulation. “The ₹2000 is almost completely out of circulation, except for possibly 0.02% which is still lying outside. Others have given it to the banks,” she added.

Digital payments continue to grow sharply. UPI processed 16.73 billion transactions worth ₹23.25 lakh crore in December 2024 alone, rising from ₹21.55 lakh crore in November. Annual UPI transactions reached 172 billion in 2024—a 46% increase from the previous year. 

Sitharaman noted the importance of digital awareness: “We need to have more digital awareness built so that people see a benefit in doing digital transfers.”