What Will The Reserve Bank Of India Do With The Discontinued 2000-rupee Notes?

We know that Rs 2000 notes are being taken out of circulation and we have time until September 30 to get them exchanged or deposited at the bank. The notes will continue to be legal tender until the date and may remain so even after the deadline has passed. The deadline may most likely be extended. Once the notes are collected by the bank, will the notes be treated as junk or will the RBI have some use for them?

After all the notes are collected and sent to the RBI, they will be verified using the CVPS (Currency Verification and Processing System). In an hour, a CVPS system can handle between 50,000 to 60,000 notes. These devices count the currency and determine if it is real or not. It then separates the notes into groups that fit and don’t fit. Paper shredders are used to shred inappropriate notes. Additionally, fit notes are cut such that they can be recycled to create new currency notes.

Notes categorised into the unfit slot used to be burnt earlier but that has been discontinued because of the air pollution resulting from it. Instead, these notes, after being shredded, are sent to the briquetting system where they are processed into briquettes. Industrial furnaces can use these briquettes. Additionally, they are utilised in the production of paper boards.

RBI invites tenders to sell these briquettes. In 2016, when 500 and 1000 notes were out of circulation due to demonetisation, the shredded notes were sold to Western India Plywoods Limited. According to the RBI’s Annual Report for 2021-22, 1878.01 crore notes that were damaged were disposed of this year, which was 88.4 percent more than in 2020-21.