Rs 2000 banknote no longer necessary, it has served its needs, says T V Somanathan

The Reserve Bank of India (RBI) has decided to withdraw the Rs 2,000 denomination banknotes from circulation. However, the central bank has said that the currency notes will continue to be legal tender till September 30, 2023. RBI has asked banks to provide deposit and/or exchange facilities for Rs 2,000 notes until September 30, 2023. “It is no longer necessary, it has served its needs and now it is time to move on to smaller denominations. It continues as a legal tender so there won’t be any problems,” said T. V. Somanathan, Finance Secretary, while speaking to the media regarding the decision.

RBI has issued circulars on what must be done to exchange and deposit the notes in circulation. However, the Finance Ministry clarified that this is not demonetisation as such, rather this is merely a way of note replacement for security issues.

With the ₹2000 denomination bank notes set to be withdrawn from circulation, there are several Myths surrounding it. Through this series, get to know the Facts related to this decision of @RBI.#MythsVsFacts #MythBusters @nsitharaman @finminindia @ianuragthakur @Murugan_MoS… pic.twitter.com/dHjieNtJ3Y

— Ministry of Information and Broadcasting (@MIB_India) May 21, 2023

“This has happened many times! A few years ago, Rs 500 notes were withdrawn for security reasons. This is not new. This is not demonetisation, this is the replacement of Rs 2000 rupee notes,” added Somanthan.

RBI has also clarified the reason behind this decision. “About 89 per cent of the Rs 2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years. The total value of these banknotes in circulation has declined from Rs 6.73 lakh crore at its peak of March 31, 2018 (37.3 per cent of Notes in Circulation) to Rs 3.62 lakh crore, constituting only 10.8 per cent of Notes in Circulation on March 31, 2023,” the central bank mentioned in its circular.

As stated by the RBI, that denomination is not commonly used for transactions and the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public. 

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