RBI stops printing Rs 2000 notes launched during demonetisation: Report

The Rs 2000 note, along with the new Rs 500 note, was introduced in November 2016 to replace the demonetised Rs 1000 and Rs 500 notes and to deal with the acute currency shortage.

Opposition parties had criticised the introduction of these notes as a higher denomination note would only make it easier for people to hoard money.

The critics also included bankers like Uday Kotak (MD of Kotak Mahindra Bank) who questioned the government’s move to bring in Rs 2000 notes to replace Rs 1000 notes.

In April 2018, there was an acute shortage of cash. The government suspected that the cash may have been hoarded ahead of state elections and in the aftermath of the Nirav Modi scam.

During the same period, the income tax department seized massive amounts of Rs 2000 notes.

There have been indications of phasing out the Rs 2000 note. The RBI annual report in August 2018 stated that only 7.8 crore notes of Rs 2000 denomination were added in 2017-18, bringing the total to 336.3 crore Rs 2000 notes in circulation as of March 2018.

The share of Rs 2000 notes in the total currency circulation has experienced a steep decline, from 50.2 percent in March 2017 to 37.3 percent in March 2018.

As of March 2018, the total currency in circulation was Rs 18.03 lakh crores. Around Rs 6.73 lakh crores or 37 percent of the currency is in Rs 2000 notes and Rs 7.73 lakh crores or 43 percent is in Rs 500 notes. The remaining is in lower denominations.

To compensate, the printing of Rs 500 notes has been increased. 958.7 crore Rs 500 notes were added to circulation in 2017-18, with 588.2 crore notes already in circulation since the previous year.

Moneycontrol has asked the RBI for a comment. The copy will be updated if there is a response.