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₹2,000 Notes To Be Withdrawn, Exchange Them By 30 September: Key Highlights

The RBI has directed banks to start taking ₹2,000 notes for exchange with lower denomination ones from 23 May.

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India
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The Reserve Bank of India (RBI) on Friday, 19 May, said it will withdraw ₹2,000 notes from circulation, and that people can either exchange or deposit them by 30 September.

However, the RBI has not clarified in their statement whether the note will remain a legal tender. Some reports, quoting RBI sources, have 'clarified' that the note will remain a legal tender even post 30 September.

The ₹2,000 note was introduced in 2016 after the Narendra Modi-led government withdrew ₹500 and ₹1000 denominations, without prior intimation.

The Big Points

  • The RBI has directed banks to start taking ₹2,000 notes for exchange with lower denomination ones from 23 May.

  • It has also ordered all banks to stop issuing ₹2,000 notes immediately.

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The RBI's Reasoning

"The objective of introducing ₹2,000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, printing of ₹ 2000 banknotes was stopped in 2018- 19," the RBI said in a statement.

"In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of ₹2000 banknotes into banknotes of other denominations can be made up to a limit of ₹20,000 at a time at any bank starting from 23 May 2023," the RBI added.

RBI Cites 2014 Precedent

In the press release from yesterday, the RBI has referred to a 2104 order when they withdrawn all banknotes issued prior to 2005. Back then, the RBI had given three months for people to exchange/deposit the notes and after the three months were up, people depositing more than 10 pieces of Rs 500/Rs 1000 note had to provide identity and residence proof.

Secondly, it also refers to its “clean note policy” and says that the withdrawal is done to “ensure availability of good quality banknotes”.

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'Cover up Of A Foolish Decision': Opposition Blasts

In a tweet, former Finance Minister and Congress leader P Chidambaram said the ₹2000 banknote is hardly a popular medium of exchange, calling it a “band-aid” to cover up “the foolish decision of demonetising ₹500 and ₹1000 notes.”

Senior Congress leader Pawan Khera said, “The ghost of 8 November 2016 has come back to haunt the nation once again. The greatly propagated move of demonetisation continues to be a monumental disaster for this nation. The PM gave sermon to the nation on the benefits of the new 2000 notes, today when the printing is stopped what happened to all those promises?”

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