In a not so sudden move, the RBI has announced it is withdrawing the Rs 2,000 note. It is not all so sudden because the government had stopped printing them in 2018-19, giving hints of their eventual withdrawal.
One can deposit the Rs 2,000 notes one has into one’s bank account or alternatively or additionally exchange a maximum of ten such notes a day at any branch of any bank till September 30, 2023. The 2,000-denomination banknote was introduced in November 2016 after the Modi government had announced the demonetization of Rs 500 and Rs 1,000 notes.
Rs 2000 notes introduced to meet urgent demand for currency notes
As per RBI, the objective of introducing the Rs 2,000 notes was to meet the urgent demand for currency notes on the back of demonetization which had sucked out as much as86%of the currency in circulation. In a way, it represented a ham-handed approach to remonetization on the back of demonetization. This time around it won’t be all that crippling as Rs 2,000 notes constitute just 10%of the currency in circulation.
The Rs 2,000 note will, however, continue to be honoured as legal tender. This means it will be accepted, if offered in payment of a debt. But it is also a fact that no sensible person would accept the Rs 2,000 note in a trade transaction unless he can wangle a discount i.e., accepting it for profit.
In other words, if you have to pay a trader Rs 1,800, he may accept a Rs 2,000 note and keep the change! Be that as it may. The window to exchange Rs 2,000 notes will open on May 23, since the RBI wants to give banks time to make preparatory arrangements. The facility to exchange Rs 2,000 notes will also be available at 19 regional offices of RBI. It is not necessary for a person to be a customer of the bank to exchange the notes.
RBI advises banks to stop issuing Rs 2000 notes
The RBI has also advised banks to stop issuing Rs 2,000 denomination banknotes with immediate effect. This change has been brought about in pursuance with RBI's “Clean Note Policy”, the RBI said in its communiqué.
About 89% of the Rs 2,000 denomination notes were issued prior to March 2017 and are at the end of their estimated lifespan of 4-5 years. No instructions have been given to banks for not filling Rs 2,000 notes in ATMs.
Demonetization in 2016
In 2106, at the time of demonetization, petrol bunks and hospitals were allowed to accept the bad notes, as it were, without limit. Crooks made a meal of the latitude. This time around too it looks like they may join the party and squeeze more out of patients and drivers.
The exchange counters in banks too could beckon crooks who may send their minions and servants on the daily errand of getting rid of the disagreeable notes. The government should ideally have put in place a mechanism to foil wholesale laundering by putting a cap of ten Rs 2,000 notes per Aadhaar card.
But even this might not deter the intrepid black money holders who might send the bulk of their staff members every day to banks for laundering. Anyway, the government must be congratulated. In the upcoming elections, politicians would not shower confetti of Rs 2,000 notes.
(To receive our E-paper on WhatsApp daily, please click here. To receive it on Telegram, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)