Currency notes of Rs. 2000 were introduced by the Reserve Bank of India on 8th November 2016. The introduction of Rs. 2000 notes was a part of the demonetisation exercise of the Government of India, which involved the de-recognition of existing 500 and 1000 rupee notes as legal tenders. The demonetisation move was aimed at disrupting illegal activities and counterfeit currency notes by invalidating around 86% of the currency notes in circulation at that point of time.
Rs. 2000 bank notes have a distinctive magenta colour and advanced security features. They were introduced to address the problem of cash shortages during the demonetisation exercise. The notes were initially low in circulation due to the process of ATM recalibration but became widely available later on. By May 2023, Rs. 2000 notes made up around 11% of the total currency in circulation, with a total worth of around 3.56 lakh crore rupees.
Legal Status in India
Rs. 2000 notes have not been banned and continue to be legal tenders in India. However, on 19th May 2023, the Reserve Bank of India announced the withdrawal of Rs. 2000 currency notes from circulation as a part of its “Clean Note Policy”. The central bank clarified that Rs. 2000 notes were not de-recognised as legal tenders. Thus, unlike demonetisation, this is was a phased and non-disruptive process.
RBI instructed the citizens to deposit or exchange the Rs. 2000 notes held by them at bank branches. The facility to deposit/exchange Rs. 2000 notes at bank branches was initially available till 30th September 2023, but the deadline was extended to 7th October 2023. Apart from bank branches, the facility was also available at 19 regional offices of RBI. While there was no restriction on deposit of Rs. 2000 bank notes in KYC-compliant accounts, the limit to exchange Rs. 2000 notes was fixed at 20,000 rupees at a time.
Reasons for withdrawal
In a statement, the RBI informed the public that it stopped the printing of Rs. 2000 banknotes in 2018-19 because the notes had fulfilled the objective of expeditiously meeting the currency requirements of the economy in aftermath of the withdrawal of the legal tender status of Rs. 500 and 1000 notes.
The RBI also said that the stock of banknotes in other denominations were enough to meet the currency requirements of the public.
Current Status
It is legal to hold Rs. 2000 notes and use them in transactions. According to the RBI, Rs. 2000 notes worth 6577 crore rupees are still with the public, while 98.5% of such notes have been taken out of circulation. The facility to deposit/exchange Rs. 2000 banknotes is still available at 19 regional offices of RBI.
