The Reserve Bank of India (RBI) on Friday said that it will withdraw the Rs 2,000 denomination banknote from circulation but it will continue as legal tender.
The RBI also pointed out that this denomination is not commonly used for transactions and further, the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public.
"In view of the above, and pursuance of the 'Clean Note Policy' of the Reserve Bank of India, it has been decided to withdraw the 2,000 denomination banknotes from circulation," the RBI said.
What is RBI's 'Clean Note Policy'?
Clean Note Policy is a policy adopted by the Reserve Bank of India to ensure the availability of good quality banknotes to the members of the public.
READ | BREAKING: RBI withdraws Rs 2,000 notes, will continue as Legal Tender
In a statement, the RBI said, "The 2,000 denomination banknote was introduced in November 2016 primarily to meet the currency requirements of the economy in an expeditious manner after the withdrawal of the legal tender status of all 500 and 1,000 banknotes in circulation at that time."
"The objective of introducing 2,000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, the printing of 2,000 banknotes was stopped in 2018-19," the RBI said.
The RBI said that about 89 percent of the 2,000 denomination banknotes were issued before March 2017 and are at the end of their estimated life span of 4-5 years.
RBI, in its statement, said, "The total value of these banknotes in circulation has declined from Rs 6.73 lakh crore at its peak as on March 31, 2018 (37.3 percent of notes in circulation) to Rs 3.62 lakh crore constituting only 10.8 percent of Notes in Circulation on March 31, 2023."
It also said that all banks shall provide deposit and/or exchange facilities for 2,000 banknotes until September 30, 2023.
