Banks Are Stopping Rs 2000 Note Circulation In ATMs, Branches: Is Rs 2000 Note Being Scraped?

As per the reports coming in, A top public sector bank in the country reportedly issued instructions to its senior officials to restrict the circulation of currency notes of Rs 2,000 denominationt.

How Did This Happen?

Recently, the officials have been asked not to create panic among customers and told them to receive Rs 2,000 notes from the bank customers.

As per the report, after issuing the directive to restrict the circulation of Rs 2,000 notes, senior officials of the public sector bank (PSB) reportedly called branch managers to confirm that it was being executed immediately.

The branch officials were asked to provide only the denominations of Rs 500, Rs 200 and Rs 100 in ATMs and to meet the possible inconvenience arising out the situation, the supply of Rs 100 notes will be increased through currency chests, said the report citing an email of the PSB.

However, the report did not mention the name of the PSB.

Why Would This Happen?

 After the Demonetisation in November 2016, the denomination of Rs 2,000 note was introduced.

The Reserve Bank of India (RBI) had informed that it had not printed a single banknote of Rs 2,000 denomination in FY20 as it had stopped the printing of the high-value denomination notes temporarily on security grounds in October last year.

According to the experts, the purpose behind the move to scale down and finally stop the printing of the high-value notes was reportedly an attempt to prevent easy hoarding, which defied the government’s initiatives to curb black money flow.

What Does The Finance Ministry Say?

During fiscal 2017, about 3,542.991 million notes of Rs 2,000 denomination were printed.

In the next financial year, the number saw a dip as the central bank printed only 111.507 million notes of the same denomination.

According to a top finance ministry official, the printing of Rs 2,000 banknote had been reduced to the “minimum” by the RBI in January 2019.

After the sudden decision to ban old Rs 500/1,000 currency notes by the government, soon the RBI had come out with the Rs 2,000 currency note along with a new look Rs 500 note as part of its massive remonetisation exercise.

According to the senior official, RBI and the government from time to time decide on the quantum of currency to be printed on the basis of money in circulation.

While Rs 2,000 was launched, it was decided that the printing would be “scaled down” going forward, since the new high currency value note was meant for meeting the remonetisation need.

The official said “The printing of 2,000 rupee notes has been substantially reduced. It has been decided to limit the printing of 2000 currency notes to a minimum. This is nothing new,”.

Also, a slew of fake note cases has been reported in the country. 

According to the National Criminal Records Bureau (NCRB) revelation, 56 percent of all the Rs 2,000 notes seized were fake. 

Ultimately this has resulted in a decrease in the production and consequent supply of the denominated notes across the country.