RBI's currency cleanup: 2000-rupee notes vanish as 88% of currency returned since May

In a recent announcement on Tuesday, the Reserve Bank of India (RBI) revealed that 88 per cent of the country's highest denomination 2000-rupee currency notes, amounting to 3.14 trillion rupees ($38.17 billion), have been returned to the central bank since their withdrawal from circulation. The decision to withdraw these high-value notes was made in May, allowing for exchange or deposit until September 30.

The introduction of the 2000-rupee denominated notes in 2016 aimed to replenish India's economy after the government's unexpected demonetization move, which scrapped high-value banknotes. However, the RBI has consistently expressed its desire to reduce high-value notes in circulation and halted the printing of 2000-rupee notes over the past four years.

RBI's Clean Note Policy

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As of July 31, 2023, the total value of 2000-rupee notes in circulation stands at 420 billion rupees. This is a significant decline from 3.62 trillion rupees on March 31, 2023, marking the end of the last fiscal year. During this period, the central bank stated that 87 per cent of the banknotes received by lenders were in the form of deposits, while the remaining 13 per cent were exchanged for other denominations.

To facilitate a smooth transition, the RBI urged the public to utilize the next two months to deposit and/or exchange any remaining 2000-rupee banknotes they hold to avoid a last-minute rush before the September 30 deadline. The central bank's 'Clean Note Policy' motivated the withdrawal of the 2000-rupee banknotes, citing their limited use in transactions. The RBI reassured the public that an ample stock of banknotes in other denominations remains available to meet their currency requirements.

Notably, the total value of 2000-rupee banknotes in circulation, which stood at 3.62 lakh crore rupees on March 31, 2023, declined to 3.56 lakh crore rupees by May 19, 2023.

As the withdrawal deadline approaches, the RBI's call to the public to take timely action will ensure a smooth and orderly process. Individuals and businesses are encouraged to deposit or exchange their 2000-rupee banknotes well before September 30, 2023, to avoid any potential inconvenience.

( With Inputs from Agencies)