The Reserve Bank of India (RBI) has decided to remove Rs 2000 notes from circulation. The note is being removed from circulation in accordance with the RBI’s clean note policy, according to the announcement. The central bank has requested that the Rs 2,000 note be exchanged or deposited in banks before September 30, 2023. The RBI has emphasized that the Rs 2000 note remains legal tender.
This implies that the Rs 2000 note may be used to purchase products and services, as well as in ordinary transactions. The current circular, however, makes no mention of what would happen if the Rs 2000 note is not exchanged or submitted to banks by the September 30 deadline.
The RBI stated in its direction to all banks that the instructions for the exchange and deposit of Rs 2000 notes are applicable till September 30, 2023. As a result, one must wait for additional instructions from the RBI on what will happen to these notes after October 1, 2023.
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If the RBI thinks it necessary, it can provide a mechanism for exchanging Rs 2000 notes even after September 30, 2023, via a fresh circular, as it did in the case of the withdrawal of pre-2005 notes in 2013-14 (as described below).
As of today, because they are legal cash, the Rs 2000 notes can still be exchanged at the relevant RBI locations beyond September 30, 2023. That window is accessible to everyone in case you forget to deposit or exchange money at the bank.
If the RBI thinks it necessary and releases a fresh updated circular, a person may deposit Rs 2000 banknotes in their banking accounts even after September 20, 2023.
Here are two examples of what happened in the past when the RBI removed cash – notes and coins – from circulation.
In 2013-14, the RBI planned to remove from circulation those banknotes produced prior to 2005. Because such notes had fewer security features and newer ones with higher security features were available, this was done.
According to the RBI’s FAQs on Indian Currency (updated through May 17, 2022), the facility for exchanging pre-2005 notes is accessible in certain RBI offices. However, this does not preclude banks from accepting deposits of pre-2005 banknotes in order to credit the money to the customer’s account. The RBI repeated this in a news statement dated December 19, 2016.
According to the RBI’s mentioned FAQs, if a person possesses an old pre-2005 banknote in the amount of Rs 10, 50, or 100, such notes can be deposited in their bank accounts or swapped at the designated RBI locations. However, old Rs 500 and Rs 1000 notes cannot be exchanged or deposited in a bank account. This is because these notes were demonetized and no longer legal money as of November 8, 2016.
In the case of 25 paise coins, the central bank performed a similar process. According to the same FAQs noted, “twenty-five paise coins were withdrawn from circulation on June 30, 2011, and are thus no longer legal tender.” Coins with values less than 25 paise were removed from circulation much earlier.
All other denominations of coins of varying size, subject, and design struck by the Government of India under The Coinage Act, 2011 and released for circulation by the RBI from time to time remain legal tender.”
According to the FAQs, unless withdrawn from circulation, every banknote issued by the Reserve Bank of India (Rs 2, Rs 5, Rs 10, Rs 20, Rs 50, Rs 100, Rs 200, Rs 500, and Rs 2000) shall be legal tender in payment or on account for the amount declared therein and shall be guaranteed by the Central Government, subject to the provisions of sub-section (2) Section 26 of the RBI Act, 1934.
According to the press notice published by the RBI on May 19, 2023, even though the Rs 2000 note is being phased out of circulation, it remains legal money. “Members of the general public may continue to use Rs 2000 banknotes for transactions and as payment.” They are recommended, however, to deposit and/or exchange these banknotes by September 30, 2023,” according to the FAQs for the deposit/exchange of Rs 2000 notes.