RBI may do THIS if most of the Rs 2,000 notes don't return to system by Sept 30

The Reserve Bank of India (RBI) may tighten the rules if most of the Rs 2,000 currency notes don't come back to banks by September 30, India Today reported on Monday. The central bank last Friday announced the withdrawal of Rs 2,000 notes, the highest denomination in circulation, but said the currency will remain a legal tender. It has, however, asked the public to deposit/exchange the currency notes by September 30.

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If the bulk of the Rs 2000 notes come back through the withdrawal mechanism stipulated, there would be no need to go tough and instantly declare it illegal tender, sources told India Today. This, they said, will help those who are abroad or have valid reasons for failing to exchange or deposit the currency notes.

However, if more than expected notes do not come back to the system directly by those who have them or those who receive them in transactions the RBI may have to indulge in toughening of rules to ensure compliance, the sources said.

Also read: 'India needs Rs 1,000 notes,' say netizens after RBI withdraws Rs 2,000 currency

Today, RBI Governor Shaktikanta Das said most of the Rs 2,000 rupee notes are expected to be returned by the deadline. He urged the public not to rush as there were four months before the deadline.

Rs 2,000 note was introduced primarily to meet the currency requirement of the economy after the demonetisation of Rs 500 and Rs 1000 currency notes in November 2016.

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On Friday, the central bank said that about 89 per cent of the Rs 2,000 banknotes were issued prior to March 2017 and were at the end of their estimated life span of 4-5 years. The total value of these banknotes in circulation declined from Rs 6.73 lakh crore at its peak of March 31, 2018 to Rs 3.62 lakh crore, constituting only 10.8 per cent of notes on March 31, 2023.

Speaking on the legal tender status, the RBI Governor said the central bank will see how much of the total notes in circulation come back. "And as we approach 30 Sept we will decide what needs to be done. Meanwhile, the legal tender status continues."

Meanwhile, Shaktikanta Das today met the board of directors of all public sector banks to discuss issues related to governance and ethics. The one-day interactive meeting was organised by the Department of Supervision of the RBI. He addressed the directors -- both whole time and independent -- on issues related to governance, ethics, and the role of the boards in assurance functionalities of the banks, besides highlighting the supervisory expectations, sources told PTI.

(With inputs from Rahul Shrivastava)