RBI Reports 98 Per Cent Return Of Rs 2000 Notes Since Withdrawal Announcement

As the Reserve Bank of India informed through a notification recently, it has largely been successful in removing the circulated denomination bank notes of Rs 2000 currency from circulation into banks. Based on its recent statement dated January 1st, 2025, already 98.12 per cent of notes were taken off circulation since its withdrawal on May 19, 2023.

The number of Rs 2000 currency notes in circulation has declined to the value of Rs 3.56 lakh crores as on May 19, 2023. Till December 31, 2024, the value of these notes was Rs 6,691 crore. Withdraw them or not, the Reserve Bank of India makes it clear that all 2000-rupee banknotes are still legal tender; they can still be used for any transaction.

All bank branches initially allowed the acceptance of the deposit and exchange of Rs 2000 notes. Until October 7, 2023, this facility was available. Individuals and entities had to subsequently go to any one of the 19 RBI issue offices planned and designed strictly for the purpose of depositing or exchanging such notes.

Withdrawal of Rs 2000 Notes

The process became more accessible as RBI introduced an alternate method. W.e.f 9th October, 2023, individuals could send their Rs 2000 notes via India Post to any RBI Issue Office for being credited into bank accounts. People in remote places could thus be brought within the fold of policy without having to physically visit any bank or RBI office.

Present Status and Legal Tender

The RBI clarified that the Rs 2000 banknotes were still legal tender, meaning there was no restriction on their usage for transactions. However, most of the withdrawal indicates the central bank's success in achieving the goal of reducing the circulation of high-value currency.

Why Withdrawal?

Introduced in 2016 to bridge the immediate shortage of currency following demonetization, the Rs 2000 notes were for a specific purpose only. However, over time, they could not be used for regular transactions as lower denomination notes were being circulated more widely. The withdrawal of these notes by the RBI is in line with its goal of having a cleaner and more efficient currency system.

Major Challenges Solved

The RBI had planned well in advance so that the transition was very smooth. The approach of first permitting bank exchanges and later allowing them only at RBI Issue Offices or through postal services reduced the discomfort to the masses.

Public awareness campaigns and regular updates from the RBI also helped keep citizens informed, reducing confusion and ensuring compliance. Though still available for use, the low circulation of Rs 2000 note gives a hint of slow phasing out. At present, it is more interested in bringing back or utilising the remaining ones.

It marks a show of public cooperation towards RBI when this withdrawal marks 98 per cent returns out of Rs 2000 denominational banknotes put out for ban and that still gives enough ammunition for RBI officials on their efficacies to change currencies.

As the Rs 2000 note enters history books, attention turns to the challenges RBI would face in currency reform measures that can fortify the country's monetary structure, while India's economic history of the past decade or so takes a backseat.