RBI has announced (on 19th May 2023) that the Rs 2000 currency notes in India are being withdrawn from circulation. This announcement has been made via a notification (link) and is not like the 2016 demonetization announcement made by the government.
People can deposit and/or exchange their Rs 2000 banknotes from 23rd May 2023 to 30th September 2023 – which is the deadline for Rs 2000 note deposit and exchange.
As per the RBI, this is a withdrawal from circulation only and it is not a demonetization of Rs 2000 currency notes. Unlike the 2016 demonetisation, when the existing old currency notes of Rs 500 and Rs 1000 denomination ceased to be legal tender, the current decision will not stop Rs 2000 from being used in transactions.
So to answer your question about whether the existing Rs 2000 currency notes are legal tender or not? The answer is that these notes continue to remain legal tender.
Many people have this scarred memory of 2016 demonetization and are confusing the Circulation Withdrawal of Rs 2000 notes in 2023 as one and the same as 2016 note ban. But that is not correct. In the past also, the RBI has gone for withdrawal of notes without banning them. Like in 2013-14, it withdrew notes issued before 2005. But there was no hue and cry back then as there was neither any social media nor any demonetization experience that people had in recent past.
How Exchange & Deposit of Rs 2000 Banknotes?
The Rs 2000 banknote will continue to maintain its legal tender status and the public can continue to use Rs 2000 banknotes for all their transactions and also receive them in payment. But given the deadline for exchange and deposit is 30th September 2023, it is advisable to deposit or exchange these Rs 2000 banknotes on or before September 30, 2023.
And coming to the main question: Where and how to exchange Rs 2000 banknotes between 23rd May 2023 to 30th September 2023?
- The facility for deposit/exchange of Rs 2000 banknotes will be available at all banks branches.
- The facility for deposit and/or exchange will be available till 30th September 2023 – which is the last date to exchange Rs 2000 bank notes.
- Deposit of Rs 2000 banknotes can be made into accounts with banks in the usual manner, that is, without restrictions and subject to compliance with KYC or other norms.
- To avoid disruption of the regular bank activities, the banks may exchange Rs 2000 banknotes up to a limit of Rs 20,000/- at a time, that is 10 notes of Rs 2000 each. So this is the Rs 2000 exchange limit as of now. But there are no limits on the number of such transaction that one can make in a day. So if one deposits more than Rs 50,000 in a day, then they have to mandatorily quote the PAN number as per income tax Rule 114B that makes it mandatory for an individual to quote his/her PAN if the cash deposit in a single day exceeds Rs 50,000. Do read about the tax impact of depositing Rs 2000 notes in your bank account.
- Is there any fee for Rs 2000 exchange? As per RBI, the Rs 2000 exchange facility will be provided to public free of cost.
- What will happen to the status of Rs 2000 noes after 30th September 2003? We don’t know yet. The RBI has not yet clarified the status of these notes after the 30th September deadline.
As per the notification, RBI has given the fowling reason for the decision – the Rs 2000 denomination banknote was introduced in 2016 (RBI Notification link) under Section 24(1) of RBI Act, 1934 primarily to meet the immediate currency requirement of the economy after withdrawal of the legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time due to demonetisation. With fulfilment of the objective of introduction of Rs 2000 denomination and availability of banknotes in other denominations in adequate quantity, printing of Rs 2000 banknotes was stopped in 2018-19. Further, majority of the Rs 2000 denomination notes were issued prior to March 2017, have completed their estimated lifespan and are not observed to be commonly used for transactions anymore. Therefore, it has been decided that, in pursuance of RBI’s ‘Clean Note Policy’, the Rs 2000 denomination banknotes shall be withdrawn from circulation. The Rs 2000 banknotes will continue to be legal tender. For completeness and for those who are curious – What is RBI’s Clean Note Policy due to which Rs 2000 banknotes are being retired? Under the Clean Note Policy, RBI has instructed banks to give the public only good-quality and clear currency notes and coins with better security features, and also not to recycle worn out / soiled notes and withdraw them out of circulation.
RBI has also issued a detailed FAQ on Rs 2000 banknote withdrawal (link) on its website.
The same is reproduced below for quick reference –
1. Why are ₹2000 denomination banknotes being withdrawn?
The ₹2000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934 primarily with the objective to meet the currency requirement of the economy in an expeditious manner after withdrawal of the legal tender status of all ₹500 and ₹1000 banknotes in circulation at that time. With fulfilment of that objective and availability of banknotes in other denominations in adequate quantities, printing of ₹2000 banknotes was stopped in 2018-19. A majority of the ₹2000 denomination notes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years. It has also been observed that this denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations continue to be adequate to meet the currency requirement of the public.
In view of the above, and in pursuance of the “Clean Note Policy” of the Reserve Bank of India, it has been decided to withdraw the ₹2000 denomination banknotes from circulation.
2. What is Clean Note Policy?
It is a policy adopted by RBI to ensure availability of good quality banknotes to the members of public.
3. Does the legal tender status of ₹2000 banknotes remain?
Yes. The ₹2000 banknote will continue to maintain its legal tender status.
4. Can ₹2000 banknotes be used for normal transactions?
Yes. Members of the public can continue to use ₹2000 banknotes for their transactions and also receive them in payment. However, they are encouraged to deposit and/or exchange these banknotes on or before September 30, 2023.
5. What should the public do with the ₹2000 denomination banknotes held by them?
Members of the public may approach bank branches for deposit and/or exchange of ₹2000 banknotes held by them.
The facility for deposit into accounts and exchange for ₹2000 banknotes will be available at all banks until September 30, 2023. The facility for exchange will be available also at the 19 Regional Offices (ROs) of RBI having Issue Departments1 until September 30, 2023.
6. Is there a limit on deposit of ₹2000 banknotes into a bank account?
Deposit into bank accounts can be made without restrictions subject to compliance with extant Know Your Customer (KYC) norms and other applicable statutory / regulatory requirements.
7. Is there an operational limit on the amount of ₹2000 banknotes that can be exchanged?
Members of the public can exchange ₹2000 banknotes upto to a limit of ₹20,000/- at a time.
8. Can ₹2000 banknotes be exchanged through Business Correspondents (BCs)?
Yes, exchange of ₹2000 banknotes can be made through BCs upto a limit of ₹4000/- per day for an account holder.
9. From which date will the exchange facility be available?
To give time to the banks to make preparatory arrangements, members of the public are requested to approach the bank branches or ROs of RBI from May 23, 2023 for availing exchange facility.
10. Is it necessary to be a customer of the bank to exchange ₹2000 banknotes from its branches?
No. A non-account holder also can exchange ₹2000 banknotes up to a limit of ₹20,000/- at a time at any bank branch.
11. What if someone needs more than ₹20,000/- cash for business or other purposes?
Deposit into accounts can be made without restrictions. The ₹2000 banknotes can be deposited into bank accounts and cash requirements can be drawn thereafter, against these deposits.
12. Is there any fee to be paid for the exchange facility?
No. The exchange facility shall be provided free of cost.
13. Will there be special arrangements for senior citizens, persons with disabilities, etc. for exchange and deposit?
Banks have been instructed to make arrangements to reduce inconvenience to the senior citizens, persons with disabilities, etc., seeking to exchange/deposit ₹2000 banknotes.
14. What will happen if one cannot deposit / exchange ₹2000 banknote immediately?
To make the entire process smooth and convenient for the public, a period of over four months has been given for deposit and/or exchange of ₹2000 banknotes. Members of the public, are therefore, encouraged to avail this facility at their convenience within the allotted time.
15. What will happen if a bank refuses to exchange / accept deposit of ₹2000 banknote?
For redress of grievance in case of deficiency of service, the complainant / aggrieved customer may first approach the concerned bank. If the bank does not respond within a period of 30 days after lodging of the complaint or if the complainant is not satisfied with the response/resolution given by the bank, the complainant can lodge the complaint under the Reserve Bank – Integrated Ombudsman Scheme (RB-IOS), 2021 at the Complaint Management System portal of RBI.
To summarize, this Rs 2000 note circulation ban or withdrawal may seem like demonetisation to many, but it is not. There is absolutely no reason for the public to get confused or rush to the banks in a hurry. The Rs 2000 banknotes remain legal and can be exchanged and deposited in banks till 30th September 2023. And anyways, unlike the Rs 500 and Rs 1000 banknotes, the Rs 2000 notes constitute only a relatively smaller portion of the total currency in circulation as of today. So most common people will only have very small quantities of these notes if they still have any left. In fact, most people claim that they don’t get to see the Rs 2000 pink notes so easily these days anyways.
Hopefully, this article answers all your questions about Rs 2000 Banknotes Circulation Ban By RBI and more importantly, how to exchange Rs 2000 notes till 30th September 2023.