Myths and Facts of Withdrawal of ₹2000 Notes
26th May, 2023
The Reserve Bank of India (RBI) announced the withdrawal of ₹2000 denomination bank notes from circulation on May 19, 2023. However, the banknotes will continue to be considered legal tender till it is completely taken out of circulation by September.
The Government introduced ₹2,000 banknotes to meet the urgent currency requirement of the economy post the demonetisation of the old ₹500 and ₹1,000 notes in November 2016. These high-denomination notes ensured that the general public had adequate liquid cash in hand to meet their needs.
This purpose of introducing ₹2,000 notes was met over time and, subsequently, notes of other denominations became available in adequate quantities. New notes of each denomination were introduced thereafter. Following this, the Government ceased the printing of ₹2,000 banknotes in the year 2018–19.
RBI has advised the public to deposit or exchange all existing ₹2000 bank notes by September 30, 2023. With the announcement on Friday, many misapprehensions have been doing rounds on the internet concerning the validity and status of ₹2000 currency notes after September 30.
Myths and Facts of Withdrawal of ₹2000 Notes
After this announcement, there has been a rise in misleading information about this move. Some of the more common misconceptions and myths surrounding this move are that
If the banknotes are not exchanged on or before September 30, 2023, the ₹2000 notes shall become illegal.
One can exchange the ₹2000 banknotes for smaller currency denominations only and only in those banks in which the holder has an account.
An additional fee for exchanging bank notes at authorised banking institutions will be charged upon exchange or deposit.
This was an act of demonetisation
Let's Break a Few Myths About the ₹2000 Notes De-circulation
RBI has issued very clear guidelines on the handling of this withdrawal. These are some facts that will bust the myths that many may have in their minds:
RBI has advised that all ₹2000 banknotes held by the public be exchanged or deposited by September 30. However, the denomination will continue to hold legal tender status even after this date.
You can freely use the ₹2000 banknotes to conduct normal transactions and receive payments till 30th September.
It is not compulsory to exchange currency notes only at the banks you have an account in; This can be done in any bank, regardless of whether or not you are an account holder there.
The exchange is not limited to banks—The exchange can also be made at the 19 Regional Offices (ROs) of RBI that have issue departments.
At a time, you can exchange ₹2000 currency notes for smaller denominations equalling no more than ₹20,000 at the bank branch.
The exchange facility will be provided free of cost.
Regarding deposits into bank accounts, there is no limit or restriction on the amount of ₹2000 notes that can be deposited, subject to compliance with KYC norms and applicable regulations.
RBI has clarified that if someone requires cash of over ₹20,000 for business or other purposes, they can deposit the ₹2000 banknotes into bank accounts, which can then be debited to meet the requirements.
All banks have been directed to make special arrangements to make the process seamless and reduce inconvenience for those with disabilities and for senior citizens.
If the exchange of ₹2000 banknotes is being made through Business Correspondents (BCs), the limit for an account holder is set at ₹4000 in a day.
The process of availing of the exchange facility at bank branches or RBI’s regional offices will begin on May 23rd, 2023. This shall continue for more than four months to provide ease in depositing and exchanging the ₹2000 banknotes for smaller denominations without interfering with or hampering the bank’s regular activities.
This is not demonetisation, like in late 2016, but an exercise to exchange ₹2000 currency notes into smaller denominations.
The entire exercise of the de-circulation of the ₹2000 banknotes is a routine clean-up activity by the central bank. The instructions from RBI will remain valid till 30th September 2023. You can expect this to happen seamlessly till all ₹2,000 banknotes are discontinued.
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*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.