Defined: Why Rs 2,000 Notice Was Launched, And Why It is Being Junked

Rs 2,000 notes have been withdrawn below the central financial institution’s “Clear Notice Coverage”.

New Delhi:

The Rs 2,000 banknote was launched in November 2016 below Part 24(1) of the RBI Act, 1934 — which permits the central financial institution to difficulty notes of any denomination not exceeding Rs 10,000 — primarily to fulfill the foreign money requirement of the financial system “in an expeditious method” after the massive demonetisation train, through which the authorized tender standing of all Rs 500 and Rs 1,000 banknotes in circulation at the moment was withdrawn, the Reserve Financial institution of India has mentioned.

“With fulfilment of that goal and availability of banknotes in different denominations in ample portions, printing of Rs 2000 banknotes was stopped in 2018-19,” RBI mentioned.

RBI Governor Shaktikanta Das at the moment mentioned the train is a part of the “foreign money administration system” of the central financial institution, and mentioned there is no motive to hurry to banks as folks have 4 months to alter or deposit Rs 2,000 notes.

Mr Das mentioned the financial institution expects most notes to come back again. “We’ll determine what to do subsequent after September 30. However it’ll proceed as authorized tender,” he mentioned and guaranteed the folks, even these residing in overseas nations, that the RBI shall be delicate to all their issues.

Rs 2,000 notes in numbers

A majority (89 per cent) of the Rs 2,000 notes had been issued earlier than March 2017, and are on the finish of their estimated life span of 4 to 5 years, the central financial institution additional mentioned, highlighting that Rs 2,000 notes are usually not generally used for transactions.

“The overall worth of those banknotes in circulation has declined from Rs 6.73 lakh crore at its peak as on March 31, 2018 (37.3% of Notes in Circulation) to Rs 3.62 lakh crore constituting solely 10.8% of Notes in Circulation on March 31, 2023,” RBI mentioned.

RBI additionally has ample inventory of banknotes in different denominations, it mentioned.

What’s the “Clear Notice Coverage”

Rs 2,000 notes have been withdrawn below the central financial institution’s “Clear Notice Coverage”.

The target of RBI’s “Clear Notice Coverage”, launched in 1999, is to offer good high quality foreign money notes and cash whereas the dirty notes are withdrawn out of circulation. The Reserve Financial institution had then instructed the banks to difficulty solely good high quality clear notes to the general public and chorus from recycling the dirty notes acquired by them over their counters.

A number of different steps had been taken, together with directing banks to dispose of stapling of observe packets and to introduce banding the packets with paper/polythene bands in order that the lifetime of the foreign money notes is elevated. Individuals had been additionally urged to not write on the foreign money notes, and banks had been instructed to offer unrestricted services for the alternate of dirty and mutilated notes. As per the Reserve Financial institution directions, foreign money chest branches of the banks should supply, even to non-customers, good high quality notes and cash in alternate for dirty and mutilated notes. 

How the alternate facility will work

India’s greatest public financial institution, the State Financial institution of India, yesterday clarified that no kind or slip could be required whereas exchanging or depositing Rs 2,000 notes.

Authorities sources have mentioned folks can alternate Rs 2,000 rupee notes as much as Rs 20,000 any variety of occasions in a day. An individual has to face in a queue, and so they can hold coming again and stand in the identical queue after exchanging the cash, they mentioned. The higher restrict of Rs 20,000 is to make sure operational comfort and to keep away from disruption of standard actions of financial institution branches.

The alternate facility begins on Could 23 and can proceed until September 30. The RBI might lengthen the deadline to alternate or deposit the notes from September 30 if wanted, however even when anybody has a Rs 2,000 observe after the present deadline, it’ll stay a legitimate tender, sources informed Ednbox.

On the choice to set September 30 because the deadline, the RBI Governor mentioned folks would not have taken it significantly and exchanged notes in the event that they hadn’t specified a time.

It isn’t mandatory for an individual to be a buyer of a financial institution to alternate the soon-to-be-discontinued foreign money with them.

RBI’s directions to banks

The RBI clarified that folks do not must pay any price to avail of the alternate facility. Additional, banks have been instructed to make preparations to scale back inconvenience for senior residents and individuals with disabilities who want to alternate or deposit Rs 2,000 banknotes.

In a contemporary round to banks at the moment, RBI has directed them to take care of each day knowledge on deposits and alternate of Rs 2,000 notes in a easy, fastened format. It has additionally requested them to offer services like shaded ready areas, and ingesting water to clients, contemplating summer season.

RBI had undertaken the same withdrawal of notes from circulation in 2013-2014.