Purpose of Rs 2000 notes in system fulfilled: RBI governor
Mumbai, Maharashtra - Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday reiterated that Rs 2000 notes will continue to be a legal lender, after the Central bank’s announcement that the notes will be withdrawn from circulation.
He also said he doesn’t expect a rush in the branches and urged people to not rush to banks. The Governor said the Rs 2000 note was primarily issued to replenish money, taken out from the system during the demonetisation of Rs 500 notes and Rs 1,000 notes.
Shaktikanta Das in an interaction with media persons on Monday said that the higher value of currency was manufactured in a brief period of time to increase liquidity in the economy. He also added that Rs 2000 notes circulation came down below 50 per cent since then.
On being asked about the deadline of September 30, the governor said the deadline, given for Rs 2000 notes exchange, was decided so that it would be taken seriously.
“If you leave it open-ended, it becomes a kind of an endless process,” Das said during the interaction with the media.
The apex bank’s governor said that it will revisit the September deadline based on the situation.
On speculations that the decision to withdraw Rs 2000 note may put a strain on the overall money supply, the RBI Governor assured ‘we have more than an adequate quantity of notes available, already printed’.
“We have the printed notes already available in the system - not just with the RBI but also at the currency chests which are operated by the banks. So, there is adequate stock available and there is no reason to worry,” Das told the reporters.
“The purpose replenishing the value of money has been fulfilled. Today there are enough notes in circulation of other denominations,” he said.
The RBI had decided to withdraw the Rs 2000 denomination notes from circulation, but had stated that it will continue to remain as legal tender.
RBI had also advised banks to stop issuing Rs 2000 denomination banknotes with immediate effect. RBI, however, said that citizens will continue to be able to deposit Rs 2000 banknotes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch up to September 30, 2023.
The exchange of Rs 2000 bank notes into notes of other denominations can be made upto a limit of Rs 20,000 at a time at any bank starting from Tuesday.
“It has also been observed that this denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public,” RBI had said on Friday.
According to the RBI, Rs 2000 denomination banknote was introduced in November 2016, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of the legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time.
The objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, the printing of Rs 2000 banknotes was stopped subsequently in 2018-19, it said.
About 89 per cent of the Rs 2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life span of four-five years.