RBI to withdraw ₹2,000 foreign money notes from circulation, will proceed to be authorized tender

• RBI introduced the withdrawal of ₹2,000 foreign money notes from circulation on Friday.
• Folks possessing these notes can deposit them of their financial institution accounts or alternate them from Might 23 to September 30.
• The RBI has additionally suggested banks to cease issuing ₹2,000 denomination banknotes with fast impact.

The Reserve Financial institution of India (RBI) on Friday introduced the withdrawal of ₹2,000 foreign money notes from circulation, however mentioned that they’ll proceed to be authorized tender. Folks possessing these notes can deposit them of their financial institution accounts or get them exchanged from Might 23 to September 30, the central financial institution mentioned in an announcement.

“With a view to guarantee operational comfort and to keep away from disruption of normal actions of financial institution branches, alternate of ₹2000 banknotes into banknotes of different denominations could be made upto a restrict of ₹20,000/- at a time at any financial institution ranging from Might 23, 2023,” the assertion mentioned.

The RBI has additionally suggested banks to cease issuing ₹2,000 denomination banknotes with fast impact. About 89% of the ₹2,000 denomination banknotes have been issued previous to March 2017 and are on the finish of their estimated life-span of 4-5 years.

The whole worth of those banknotes in circulation has declined from ₹6.73 lakh crore at its peak as on March 31, 2018 (37.3% of notes in circulation) to ₹3.62 lakh crore constituting solely 10.8% of notes in circulation as on March 31, 2023.

“It has additionally been noticed that this denomination shouldn’t be generally used for transactions. Additional, the inventory of banknotes in different denominations continues to be ample to satisfy the foreign money requirement of the general public. In view of the above, and in pursuance of the ‘Clear Notice Coverage’ of the RBI, it has been determined to withdraw the ₹2,000 denomination banknotes from circulation,” RBI mentioned.

The ability for alternate of ₹2,000 banknotes upto the restrict of ₹20,000/- at a time shall even be supplied on the 19 Regional Workplaces (ROs) of RBI having Subject Departments from Might 23, 2023.

“As witnessed throughout demonetisation, we anticipate the deposit accretion of banks might enhance marginally in close to time period. It will ease the strain on deposit charges hikes and will additionally end in moderation in short-term rates of interest,” mentioned Karthik Srinivasan, senior VP, group head – monetary sector scores, ICRA.

It could be famous that RBI had undertaken an identical withdrawal of notes from circulation in 2013-2014.

The ₹2,000 notes have been launched in 2017, after the federal government of India went in for demonetization of ₹500 and ₹1,000 notes in November 2016. Prime Minister Narendra Modi introduced this choice in a shock speech that shocked the nation. He mentioned that the transfer would curtail the shadow economic system and encourage cashless transactions.