Bank of India gets Rs 3,104 crore, City Union Rs 385 crore through deposit & exchange of Rs 2,000 notes: Sources

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State-owned lender Bank of India (BoI) received Rs 3,104 crore and Tamil Nadu-based City Union Bank (CUB) received Rs 385 crore through deposit and exchange of Rs 2,000 denomination notes, people aware of the development told Moneycontrol on May 31.

Of the total, BoI received Rs 3,064 crore deposits in Rs 2,000 denomination notes till May 29. Similarly, CUB received Rs 350 crore in deposits and Rs 35 crore in exchange of Rs 2,000 denomination notes.

On May 19, the Reserve Bank of India (RBI) announced the withdrawal of Rs 2,000 denomination notes from circulation in pursuance of the ‘Clean Note Policy’, and advised banks to stop issuing these notes with immediate effect.

The central bank asked banks to provide a deposit and exchange facility for Rs 2,000 denomination notes until September 30. It set a limit of Rs 20,000 at a time.

“Bank of India received 1.63 crore notes of Rs 2,000 in deposits, amounting to Rs 3,064 crore till May 29,” said the source cited above on condition of anonymity.

On the other hand, N. Kamakodi, Managing Director (MD) and Chief Executive Officer (CEO) of City Union Bank said that the bank is exchanging Rs 5 crore per day, amounting to Rs 35 crore till 30 May. Similarly, sources said that BoI exchanged two lakh notes till May 29.

Moneycontrol sent queries to more than 10 banks including Bank of Baroda (BoB), Punjab National Bank (PNB), Yes Bank, Kotak Mahindra Bank, Axis Bank, HDFC Bank, Canara Bank, Punjab and Sindh Bank (PSB), and UCO Bank for data on exchange and deposit of Rs 2,000 notes. These emails remained unanswered till the time of filing this copy.

A separate email sent to BoI too remained unanswered till the time of filing this story.

SBI numbers

Earlier, State Bank of India (SBI) Chairman Dinesh Kumar Khara said around Rs 14,000 crore worth of Rs 2,000 denomination currency notes have come into bank accounts as deposits, while notes worth Rs 3,000 crore were exchanged through the branch network. "Generally, we are about 20 percent of the market," he said.

Also read: Rs 2,000 notes: Most banks insist on customers filling separate forms for note exchange

Rs 2,000 note in the market

According to RBI data, the total value of Rs 2,000 denomination banknotes in circulation was Rs 3.62 lakh crore, constituting 10.8 percent of the total notes in circulation on March 31, 2023.

About 89 percent of the Rs 2,000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated lifespan of four to five years.

“It has also been observed that this (Rs 2,000 banknote) 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 RBI said in the release.

Introduction of forms

Soon after the withdrawal of Rs 2,000 notes from circulation, most banks, except SBI, introduced separate forms for the exchange of these currency notes.

Officials of some banks told Moneycontrol that the forms were introduced because they want to maintain data on who had exchanged these notes from their respective banks.

Banks are insisting on customers filling out separate forms as a precautionary measure. The data so collected will contain customer details, which will be shared with RBI or other agencies if enquiries arise in future, bankers said.

Banks insisting on forms being filled include PNB, BoB, Canara Bank, Axis Bank, IDFC First Bank, RBL Bank and HDFC Bank.

Also read: RBI disposed 132.19 crore pieces of soiled Rs 2,000 notes in last 3 fiscals: Annual Report

RBI Governor’s take

RBI Governor Shaktikanta Das on May 24 said the central bank decided to withdraw the Rs 2,000 currency notes as this denomination was not in great use. The high-denomination notes could lead to collateral issues, he added.

“In our surveys, we found that Rs 2,000 notes were not being used at all... It was being used, but not commonly used,” he said.

Any high-denomination currency remaining in the system could have led to other collateral issues. “Therefore, we took this decision,” Das said at the CII Annual Session 2023.

Prior to this, he said most of the Rs 2,000 notes to return to the banking system by September 30.