RBI Affirms Legal Tender Status for ₹2,000 Banknotes Continues

RBI Affirms Legal Tender Status for ₹2,000 Banknotes Continues

The Reserve Bank of India (RBI) disclosed a significant milestone, revealing that nearly 97 percent of the ₹2,000 banknotes have returned to the system by November 30, 2023. Despite this, ₹9,760 crore worth of these notes continue circulating, signaling their ongoing status as legal tender.

This revelation arrives following the RBI’s decision to withdraw the ₹2,000 denomination banknotes from circulation earlier in the year. Initially introduced in November 2016 to swiftly fulfill the currency demand after eliminating ₹500 and ₹1000 notes, these high-value notes were slated for withdrawal under the “Clean Note Policy” announced on May 19, 2023.

At the time of the withdrawal announcement, ₹3.56 lakh crore worth of ₹2000 banknotes were circulated. Banks initially offered a limited window until September 30, 2023, for individuals to deposit or exchange these notes. However, this deadline was extended to October 7, 2023, allowing more time for compliance.

Reports suggest that approximately 89 percent of these banknotes were issued before March 2017 and have reached the end of their projected lifespan of 4-5 years. The total value of these older banknotes declined from a peak of ₹6.73 lakh crore on March 31, 2018, representing 37.3 percent of the currency in circulation, to ₹3.62 lakh crore by March 31, 2023, constituting a mere 10.8 percent.

The gradual return and decline in circulation of these ₹2000 banknotes underscore a more significant trend in currency dynamics. The RBI’s move to phase out these high-value notes aligns with efforts to manage currency circulation effectively and ensure the financial system’s integrity.

Despite the majority of ₹2000 notes being returned, their continued circulation emphasizes the importance of reaffirming their legal tender status. The RBI’s acknowledgment of ₹9,760 crore still in circulation underscores the need to continue accepting these notes in nationwide transactions.

As India navigates the transition away from these high-value denominations, the RBI’s measures aim to streamline the currency ecosystem while upholding monetary policy and financial stability objectives. 

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