Rs 2,000 banknotes remain legal tender even as 97.50% of circulating banknotes return to RBI

The Reserve Bank of India (RBI) on Thursday announced that around 97.50 per cent of Rs 2,000 banknotes have been returned till January 31, 2024. While the amount of Rs 2000 banknotes still circulating in the economy stood at Rs 8,897 crore, the central bank mentioned that Rs 2,000 banknotes will continue to be legal tender.

As of January 31, 2024, the total value of Rs 2,000 banknotes in circulation has significantly decreased to Rs 8,897 crore from the Rs 3.56 lakh crore reported at the close of business on May 19, 2023, the central bank said in a press note. When the decision to discontinue the banknotes was made, the cumulative value of Rs 2,000 banknotes in circulation amounted to Rs 3.56 lakh crore.

Initially, the public and various entities were instructed to exchange or deposit their Rs 2,000 banknotes in bank accounts by September 30, which was later extended to October 7, 2023. Following the discontinuation of deposit and exchange services at bank branches on October 7, the RBI provided individuals with the option to either exchange the currency or have the equivalent amount credited to their bank accounts at any of the 19 RBI offices across the country.

The total value of Rs 2,000 banknotes in circulation plummeted from Rs 3.56 lakh crore on the day of the withdrawal announcement to Rs 9,330 crore by the end of December 2023. The RBI has facilitated the process for the public to deposit and/or exchange the Rs 2,000 banknotes at its offices located in Ahmedabad, Bengaluru, Belapur, Bhopal, Bhubaneswar, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Jammu, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, New Delhi, Patna, and Thiruvananthapuram.

It is noteworthy that the Rs 2,000 banknotes were initially introduced in November 2016 following the demonetization of the then-existing Rs 1,000 and Rs 500 banknotes.

The decision to withdraw the Rs 2,000 banknotes was part of the RBI's "Clean Note Policy," aimed at phasing out banknotes that are not commonly used for transactions and ensuring an adequate stock of banknotes in other denominations to meet the currency requirements of the public. 

The Rs 2,000 denomination banknote was originally introduced in November 2016 following the demonetization of Rs 500 and Rs 1000 banknotes, with the goal of quickly meeting the economy's currency needs. However, once other denominations became readily available, the printing of Rs 2,000 banknotes ceased in 2018-19.

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