The RBI has asked banks to provide deposit and/or exchange facility for Rs 2,000 notes until September 30, 2023.
The RBI’s 19 Regional Offices (ROs) with Issue Departments will also serve as exchange points until the end of September.
Implications
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 will also stop issuing Rs 2,000 denomination banknotes with immediate effect.
Even though Rs 2,000 notes will be gradually pulled out of circulation, they will remain legal tender beyond the withdrawal date.
This means the public can continue to use these notes for transactions and also accept them as payment.
‘Second surgical strike on black money’
BJP leader Sushil Kumar Modi termed the decision a “second surgical strike on black money”.
This is the second time such exercise is being undertaken after demonetisation.
Kumar Modi said “This will not trouble the common man as they do not have Rs 2000 notes.”
Former RBI deputy governor R Gandhi said the withdrawal of Rs 2,000 bank notes would help in curbing black money to “great extent” as people are hoarding the “high value currency”.
Former finance minister
Congress veteran and former finance minister P Chidambaram heavily criticised the move, saying that “demonetisation has come full circle” adding that it was an expected move.
He wrote, “Rs 2000 note was never a ‘clean’ note. It was not used by the vast majority of the people. It was used only by people to keep their black money, temporarily!”
He said the Rs 2000 note is hardly a popular medium of exchange and this was proven correct in November 2016.
It was a “band-aid to cover up the foolish decision of demonetising Rs 500 and Rs 1000 notes which were popular and widely exchanged currencies.”
He reminded, “A few weeks after Demonetisation, the government/RBI were forced to re-introduce the Rs 500 note” and that he would “not be surprised if the government/RBI re-introduced the Rs 1000 note as well. Demonetisation has come full circle!”
Aam Aadmi Party
Aam Aadmi Party leader Saurabh Bhardwaj said: “This whole concept of starting the circulation, stopping the circulation of notes, or issuing of new notes, was started by PM Modi and the economy suffered due to this … I don’t know what will be the pros and cons of this step but I hope the decision was taken by the experts.”
Congress
Congress general secretary in-charge of communications Jairam Ramesh also criticized the decision.
He wrote, “Typical of our self-styled Vishwaguru. First Act, Second Think (FAST).
2000 rupee notes introduced with such fanfare after that singularly disastrous Tughlaqi firman of Nov 8 2016 are now being withdrawn.”
Congress leader Pawan Khera stated, “ghost of Nov 8, 2016 has come back to haunt the nation once again”.
Objective met: RBI
The Rs 2,000 denomination banknote was introduced in November 2016 primarily to meet the currency requirement quickly after the withdrawal of legal tender status of all Rs 500 and Rs 1,000 banknotes in circulation at that time.
The objective of introducing Rs 2,000 banknotes was met once banknotes in other denominations became available in adequate quantities.
About 89% of the Rs 2,000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years.
“It has been observed that this denomination is not commonly used for transactions.
Further, the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public,” the RBI said Friday.
The printing of Rs 2,000 banknotes was stopped in 2018-19.
