India’s central bank recently announced that ₹2,000 currency notes will be brought out of circulation. While they will continue to be legal tender even after the cutoff date of September 30, 2023, people are encouraged to either deposit or exchange these notes.
The ₹2,000 notes form the largest currency denomination in India. As of March 31, 2023, ₹2,000 currency notes constituted 10.8 per cent of notes in circulation. This translates to about ₹3.62 lakh crore of currency notes.
Once this proportion of the currency is out of use, ₹500 will be the largest currency denomination in India. On Monday, the Reserve Bank of India governor was asked if there was any consideration to bring back the ₹1000 currency notes.
The governor revealed that the Reserve Bank of India does not have a plan to reintroduce ₹1,000 bank notes to ease the impact following the withdrawal of ₹ 2,000 notes.
Das called reports on the subject “speculative”.
“That’s speculative. There’s no such proposal right now,” Das said when asked whether there is a possibility of reintroducing ₹ 1,000 notes.
No need to rush to banks: India’s central bank chief
Speaking to journalists for the first time since the move, Das also said that no one should rush to banks return or exchange their ₹2,000 notes.
“There is no reason to rush to banks now. You have four months, till September 30,” the RBI Governor said. He added that the deadline was given so that people take the matter seriously.
How will it affect the Indian economy
The impact of the withdrawal on the economy will be “very very marginal”, the RBI governor said, adding ₹2,000 notes made up for just 10.8 per cent of the total currency in circulation.
“₹2000 bank notes were introduced primarily to replenish the notes withdrawn following demonstration,” the RBI chief added.
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Eighty-nine per cent of the ₹2,000 notes were issued before March 2017. They are said to be at the end of their estimated life span of four to five years.
“The total value of these banknotes in circulation has declined from ₹6.73 lakh crore at its peak as on March 31, 2018 (37.3 per cent of notes in circulation) to ₹3.62 lakh crore constituting only 10.8 per cent of notes in circulation on March 31, 2023,” RBI said.
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