Rs 2,000 notes to be withdrawn from circulation, exchange window to be open till September 30

Currency notes of Rs 2,000 denomination will be withdrawn from circulation, said a Reserve Bank of India circular released on May 19.

The central bank has asked banks to provide deposit and/or exchange facility for Rs 2,000 notes until September 30, 2023, a statement said.

The banknotes of Rs 2,000 denomination will continue to be legal tender, it said.

Also Read: Rs 2,000 notes withdrawn: What should you do with your Rs 2,000 notes? RBI answers all your queries

"Holders of these notes may deposit Rs 2,000 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," it said.

Exchange facility for Rs 2,000 bank notes up to Rs 20,000 at a time would be available from May 23, the RBI said.

Also read: Rs 2,000 note exchange: What if your bank finds your notes are fake?

As per the circular, "In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of Rs 2,000 banknotes into banknotes of other denominations can be made upto a limit of Rs 20,000/- at a time at any bank starting from May 23, 2023."

The total value of these banknotes in circulation declined from Rs 6.73 lakh crore at its peak as on March 31, 2018 (37.3% of Notes in Circulation) to Rs 3.62 lakh crore constituting only 10.8% of Notes in Circulation on March 31, 2023.

"No instructions have been given to banks for not filling Rs 2,000 notes in ATMs. Banks make their own assessment of amount and denominational requirement for ATMs on the basis of past usage, consumer requirement, seasonal trend, etc," FM Sitharaman had said in March.

The Rs 2,000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of legal tender status of all ?500 and ?1000 banknotes in circulation at that time.

The objective of introducing these notes was met once banknotes in other denominations became available in adequate quantities; therefore, printing of Rs 2,000 banknotes was stopped in 2018-19, the circular said.

"The RBI decided to discontinue the Rs. 2,000 banknotes because the life span of such notes is about to end, and they constitute just 10.8% of the overall notes in circulation as of 31-03-2023. The Rs. 2,000 currency note will remain legal tender until 30th September. It is not yet clear whether the Bank will ask for the Aadhaar and PAN to exchange the currency note," Rachit Sharma, DGM, Taxmann, said.