76% of Rs2,000 Notes in Circulation Have Returned till 30th June: RBI

Moneylife Digital Team 03 July 2023

Almost 76% of the Rs2,000 currency notes withdrawn from circulation by the Reserve Bank of India (RBI) in May have been returned by the public.

According to RBI, out of the total banknotes in Rs2,000 denomination received back from circulation, about 87% is in the form of deposits. The remaining 13% has been exchanged into other denomination banknotes.

According to data from the banks, RBI says that the total value of Rs2,000 banknotes received back from circulation after the announcement on 19 May 2023 is Rs2.72 lakh crore up to 30 June 2023. "Consequently, Rs2,000 banknotes in circulation as at the close of business on 30 June 2023 stood at Rs0.84 lakh crore. Thus, 76% of the Rs2000 banknotes in circulation as on 19 May 2023 have since been returned," RBI says.

The central bank has requested the public to utilise the next three months to deposit and/or exchange the Rs2,000 banknotes from banks to avoid any rush in the last few days before 30 September 2023.

The Rs2,000 denomination banknote was introduced in November 2016 under Section 24(1) of the RBI Act, 1934, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of the legal tender status of all Rs500 and Rs1,000 banknotes in circulation at that time. "The objective of introducing Rs2000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, the printing of Rs2,000 banknotes was stopped in 2018-19."

According to RBI, about 89% of the Rs2,000 denomination banknotes were issued before March 2017 and are at the end of their estimated life span of four to five years. The total value of these banknotes in circulation has declined from Rs6.73 lakh crore at its peak as on 31 March 2018 (37.3% of notes in circulation) to Rs3.62 lakh crore, constituting only 10.8% of notes in circulation on 31 March 2023.

"It has also been observed that this denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public," the central bank says.

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