Scarce use, risk of collateral issues behind withdrawal of Rs 2,000 notes: Das

RBI Governor Shaktikanta Das

Reserve Bank of India (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 much in use and also said that high-denomination notes could lead to collateral issues.

“In our surveys we found out 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.

He also said this note has also completed its lifecycle.

"We are monitoring the situation regularly and we don’t think there is any concerns or any major issue which is coming up," Das added.

Last week, the RBI decided to withdraw Rs 2,000 banknotes from circulation in pursuance of the “Clean Note Policy”, and it advised banks to stop issuing these notes with immediate effect.

Members of the public were asked to deposit Rs 2,000 banknotes into their bank accounts and/or exchange them for banknotes of other denominations at any bank branch.

Deposit into bank accounts can be made in the usual manner, that is, without restrictions and subject to extant instructions and other applicable statutory provisions.

The central bank asked banks to provide a deposit and/or exchange facility of Rs 2,000 banknotes until September 30, to complete the exercise in a time-bound manner and to provide adequate time to the members of the public.

“The facility for exchange of RS 2,000 banknotes up to the limit of Rs 20,000/- at a time shall also be provided at the 19 Regional Offices (ROs) of RBI having Issue Departments1 from May 23, 2023,” RBI said in a release.