Rs 12,000 cr remain in circulation, RBI says day ahead of Rs 2000 note exchange deadline

MUMBAI: With just another day left for the public to avail exchange or to deposit high-value Rs 2000 banknotes at the banks, the Reserve Bank of India Governor Shaktikanta Das on Friday said only about Rs 12,000 crore (or 3.37 per cent) of the currency notes remains in circulation.

This essentially means over 96 per cent of the total value of Rs 2,000 banknotes are back in the banking system.

"We have announced the withdrawal of Rs 2,000 notes. So far, we have got back about 3.43 lakh crore and only about 12,000 crore or so are left. Of course, 87 per cent of it has come as bank deposits, and the rest is exchange of cash with other denominations over the counter," RBI Governor Shaktikanta Das told reporters after the monetary policy review meeting, responding to a query on the status of liquidity in the system.

The total value of Rs 2000 banknotes in circulation was Rs 3.56 lakh crore at the close of business on May 19, 2023 - the date on which RBI decided to withdraw the banknote.

Effectively, the total value of Rs 2000 banknotes returned to the system after the announcement on May 19 is to the tune of Rs 3.44 lakh crore.

September 30 was initially decided as the last date for the purpose of completing the exchange and deposit exercise in a time-bound manner and to provide adequate time to the public.

People were requested to utilise the month of September to deposit or exchange their Rs 2000 banknotes to avoid any rush at the last moment.

On September 30, RBI, based on a review, decided to extend the arrangement for deposit and exchange till October 7, 2023.

"With effect from October 8, 2023, banks shall stop accepting Rs 2000 banknotes for credit to accounts or exchange to other denomination banknotes," RBI said.

However, Rs 2000 banknotes can continue to be exchanged by individuals or entities at the 19 RBI Issue Offices up to a limit of Rs 20,000 at a time; can tender Rs 2000 banknotes for credit to their bank accounts in India for any amount; people within the country can also send Rs 2000 banknotes through India Post, addressed to any of the 19 RBI Issue Offices for credit to their bank accounts in India.

RBI has on many occasions confirmed that Rs 2000 banknotes will continue to be legal tender.

On May 19, the RBI decided to withdraw the Rs 2000 denomination banknotes from circulation but said it would continue to remain as legal tender.

However, RBI had advised banks to stop issuing such banknotes with immediate effect. The Rs 2000 denomination banknote was introduced in November 2016, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of the legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time.

The objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, the printing of Rs 2000 banknotes was stopped in 2018-19.