The Rs 2,000 notes are finding an outlet in petrol pumps as customers are using the withdrawn currency to make even small purchases.

Cash purchase of fuel at petrol pumps using Rs 2,000 notes has surged to almost 90% of daily sales, some petrol dealers have said. 

Prior to the RBI’s Rs 2,000 note withdrawal announcement on 19 May, cash sales was only 10%, the dealers said. Even for purchases of Rs 100/200, customers are using the Rs 2,000 note, leading to shortage of change at petrol pumps.

Petrol pump dealers have now asked the Reserve Bank of India (RBI) to instruct banks to provide enough small denomination notes to help serve customers smoothly.

“Majority of the customers are trying to use Rs 2,000 notes even for small purchases of Rs 100-200 and are expecting change from the petrol pumps. Hence, the petro outlets are extremely short of change across the country,” All India Petroleum Dealers Association president Ajay Bansal said in a statement.

It said the petrol pump dealers have been requesting customers to use the card or digital payment for fuel purchases.

“Before this Rs 2,000 withdrawal, we used to receive only 10% of our cash sales through Rs 2,000 notes. But now almost 90% of cash received at our outlets is in the form of Rs 2,000 notes only, and we have to deposit the same in banks on daily basis,” it noted.

The situation bears resemblance to the 2016 demonetisation drive with customers rushing to petrol pumps to get rid of the notes. Back then, petrol pumps and some other daily essential services were allowed to accept old Rs 500 and Rs 1,000 notes which were demonetised from 8 November 2016 and accounted for nearly 86% of the currency notes. 

Petrol pumps soon turned into outlets to launder banned currency notes, triggering the government to prematurely withdraw the facility.

This time too petrol pumps have become outlets to get the withdrawn currency out.

Petrol pump dealers are worried that with the surge in Rs 2,000 notes, they would get in trouble with tax authorities as they did during the 2016 demonetisation.

This time, though, the quantum of currency being withdrawn is much smaller and the window to complete the process is much wider. The Rs 2,000 currency notes amount to Rs 3.6 lakh crore, constituting around 10.8% of total currency in circulation. The notes can be exchanged or deposited till 30 September 2023.

The other difference is that the demonetised Rs 500 and Rs 1,000 notes, comprising 85% of the currency in circulation, ceased to be legal tender. The Rs 2,000 note, which will be withdrawn, will continue to be legal tender.