The common man was never too receptive to the Rs 2,000 notes that were introduced shortly after demonetisation. It wasn't easy to break these bills into smaller denominations. This was particularly a major problem for people in cash-dominated segments - small traders and vendors.
But this pain may be over as the Rs 2,000 notes are finally being withdrawn from circulation.
Banks have stopped filling their ATMs with Rs 2,000 notes and a massive recalibration exercise is underway to replace them with Rs 500 ones. It doesn't mean that the Rs 2,000 will vanish all of a sudden.
Bankers and technology companies Moneycontrol spoke to said the Rs 2,000 notes may remain as a legal tender for a while, but will not be in active circulation.
According to Mahesh Ramamoorthy – Managing Director, APMEA, Banking Solutions, FIS, around 2,40,000 ATMs will be recalibrated in the coming months.
What does it mean for customers?
Getting Rs 500 bills instead of Rs 2,000 notes is actually good news for customers because a higher number of smaller denomination notes are easy to transact.
The recalibration exercise is unlikely to create much problems for the customers because this process has been going on for a while now. In fact, many banks are almost through with the recalibration exercise and have stopped dispensing Rs 2,000 notes. Post-recalibration, ATMs have four cassettes, out of which three will be filled with Rs 500 notes and the fourth with a lower denomination - Rs 100 or Rs 200 notes.
The process of recalibrating all ATMs may take up to a year.
The change is good for banks as well. This is because they earn more for every cash withdrawal. Logically, there will be more number of withdrawals and banks will earn more.
Why were Rs 2,000 notes introduced in the first place?
The withdrawal of Rs 2,000 bills three years after introducing these notes raises some questions on the very purpose and the track-record of these notes. Remember, these bills were originally introduced to quickly remonetise the system post the sudden withdrawal of 86 percent currency in circulation. These notes indeed helped for faster remonetisation. But, it had consequences as well.
Cash hoarders and fake currency makers found it easier to misuse the Rs 2,000 notes. According to the National Crime Records Bureau (NCRB) data, fake Rs 2,000 notes contributed about 61 percent of the total fake currencies seized, in terms of value, in the year 2018.
In 2017 too, Rs 2,000 fake currency notes had contributed over half of the total counterfeit notes seized - about 53 percent. In terms of states, the most numbers of Rs 2,000 counterfeit notes were seized from Tamil Nadu--a total of 12,560 pieces of Rs 2000 bills were seized from the southern state, followed by West Bengal (9,615) and Karnataka (6,750). Delhi is not far behind (6457). Besides, 2,722 notes were confiscated from Gujarat and 2,355 from Maharashtra.
Remember, these are the figures of confiscated fake currency notes. Not all counterfeit notes are seized by investigative agencies and, if one accounts the number of fake currencies floating in the market, the extent of the menace will be understandably huge. Also, there have been a number of reports where IT sleuths confiscated unaccounted cash in Rs 2,000 notes.