The Reserve Bank of India (RBI) is likely to give time till end of October for returning Rs 2,000 currency notes to banks, a senior official familiar with the development said but refused to go on record.
"It looks like the RBI will extend the date for deposit and exchange of Rs 2,000 notes by at least for a month because it has to factor in the non-resident Indians as well as others living overseas, "the official said.
The RBI had initially set September 30 as the deadline for withdrawing all Rs 2,000 currency notes from the system. The central bank said on September 1 that Rs 2,000 banknotes worth Rs 3.32 lakh crore, or 93 percent of these currency notes in circulation, had returned to the banking system. The Rs 2,000 notes in circulation at the close of business on August 31 stood at Rs 0.24 lakh crore, it said. Banknotes worth Rs 3.14 lakh crore, or 88 percent in circulation, had returned to the banking system as of July 31.
On May 19, the central bank announced the withdrawal of Rs 2,000 currency bills from circulation, citing it as part of its clean-note policy, and advised banks to stop issuing the bills with immediate effect.
"In pursuance of the 'Clean Note Policy' of the Reserve Bank of India, it has been decided to withdraw the Rs 2,000 denomination banknotes from circulation," the RBI had said.
An email sent to RBI remained unanswered till the time of writing the copy.
"My sense is that the RBI will extend the deadline because the objective was withdrawal in a non-disruptive manner," Chandan Sinha, former executive director of the Reserve Bank of India, said.
Some top bankers Moneycontrol spoke to believe that the deadline extension could be aimed at securing withdrawal of the currency notes as close to 100 percent as possible. “The RBI may probably come out with special dispensation for people who have missed the time window. Some people were abroad, some were not well, and so on. They may be given special dispensation to exchange the notes,” a senior official from South Indian Bank said.
"Perhaps the RBI may offer a window to those who were abroad all these months," said former deputy governor R Gandhi.
No rush at banks
Banks haven't seen any rush to deposit or exchange Rs 2,000 currency notes so far. “The daily run rate of deposit /exchange is very low. By the last week of September, there may be a spike in the amount,” a senior official of South Indian Bank had said earlier this month.
As the objective was met and smaller denomination notes were available in adequate quantities, the printing of the Rs 2,000 notes was stopped in 2018-19.
However, data sourced by Moneycontrol from at least three banks show that a good chunk of the Rs 2,000 notes in deposits and exchanges was from businesses, and not from individual customers.
The RBI also launched an ICRR (Incremental Cash Reserve Ratio) to mop up excess liquidity in the banking system, following the withdrawal of Rs 2,000 notes.
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