The Rs 2,000 note, born during demonetisation, will be buried by 30 September 2023.

The Reserve Bank of India (RBI) today announced that the Rs 2,000 denomination banknotes would be gradually withdrawn from circulation and asked all to exchange or deposit them in banks by 30 September 2023. The limit set is Rs 20,000 at a time so as to ensure operational convenience and to avoid disruption of regular activities of bank branches.

The Rs 2,000 banknote will, however, continue to maintain its legal tender status. The public can use them for their transactions and also receive them in payment. However, as per the RBI, they are encouraged to deposit and/or exchange these banknotes on or before 30 September 2023.

Brought in to quickly replace the Rs 500 and Rs 1,000 banknotes which were demonetised and lost legal tender status in November 2016, the Rs 2,000 notes had become increasingly rare in the marketplace as the high-value currency made it uncomfortable to use in circulation. That the highest value currency note would be put out of circulation by the RBI was doing the rounds for the last three to four years.

The people are advised to deposit the Rs 2,000 notes into their bank accounts and/or exchange them into notes of other denominations at any bank branch. The RBI has also asked banks to stop issuing Rs 2,000 notes with immediate effect.

“In pursuance of the “Clean Note Policy” of the Reserve Bank of India, it has been decided to withdraw the Rs 2,000 denomination banknotes from circulation. The banknotes in Rs 2,000 denomination will continue to be legal tender. To complete the exercise in a time-bound manner and to provide adequate time to the members of public, all banks shall provide deposit and/or exchange facility for Rs 2,000 banknotes until September 30, 2023,” the central bank said today in a statement.

People can start swapping their Rs 2,000 notes on 23 May and can continue till 30 September. 

There is no limit on the amount that can be deposited. The Rs 2,000 banknotes can be deposited into bank accounts and cash requirements can be drawn thereafter, against these deposits.

The facility for exchange of Rs 2,000 notes, up to the limit of Rs 20,000 at a time, will also be provided at the 19 regional offices of the RBI having issue departments from 23 May.

The reason for pulling out the Rs 2,000 banknotes is that it was not popular and even at the peak of circulation did not comprise much of the total currency. Currently, it comprises only 10%-11% of the total currency. When the demonetisation of Rs 500 and Rs 1,000 notes was done in 2016, they comprised 80% of the total currency in circulation.

According to the RBI, Rs 2,000 notes had been introduced in 2016-17 “primarily to meet the currency requirement of the economy in an expeditious manner,” soon after demonetisation. “The objective of introducing Rs 2,000 banknotes was met once banknotes of other denominations became available in adequate quantities,” the RBI added.

The RBI said it had stopped printing Rs 2,000 notes in 2018-19 and therefore most notes in circulation had reached the end of their ‘estimated lifespan’. “About 89% of the Rs 2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated lifespan of 4-5 years,” the central bank added.

The Rs 2,000 notes were being used less and less in transactions. “It has also been observed that this denomination is not commonly used for transactions,” RBI said, adding that “the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public.”

“The total value of these banknotes in circulation has declined from Rs 6.73 lakh crore at its peak as on March 31, 2018 (37.3% of notes in circulation) to Rs 3.62 lakh crore constituting only 10.8% of notes in circulation on March 31, 2023,” it said.

“Demonetisation has come full circle,” tweeted P. Chidambaram, former finance minister during the UPA regime.

“The Rs 2,000 note was a band-aid to cover up the foolish decision of demonetising Rs 500 and Rs 1,000 notes which were popular and widely exchanged currencies. A few weeks after demonetisation, the government/RBI were forced to re-introduce the Rs 500 note. I shall not be surprised if the government/RBI re-introduced the Rs 1,000 note as well.”

RBI's Explanation

The RBI explains to the public on the common queries.

1. Why are Rs 2,000 denomination banknotes being withdrawn?

The Rs 2000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934 primarily with the objective to meet the currency requirement of the economy in an expeditious manner after withdrawal of the legal tender status of all Rs 500 and Rs 1,000 banknotes in circulation at that time. 

With fulfilment of that objective and availability of banknotes in other denominations in adequate quantities, printing of Rs 2,000 banknotes was stopped in 2018-19. A majority of the Rs 2,000 denomination notes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years. It has also been observed that this denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations continue to be adequate to meet the currency requirement of the public.

In view of the above, and in pursuance of the “Clean Note Policy” of the Reserve Bank of India, it has been decided to withdraw the Rs 2,000 denomination banknotes from circulation.

2. What is Clean Note Policy?

It is a policy adopted by RBI to ensure availability of good quality banknotes to the members of public.

3. Does the legal tender status of Rs 2,000 banknotes remain?

Yes. The Rs 2,000 banknote will continue to maintain its legal tender status.

4. Can Rs 2,000 banknotes be used for normal transactions?

Yes. Members of the public can continue to use Rs 2,000 banknotes for their transactions and also receive them in payment. However, they are encouraged to deposit and/or exchange these banknotes on or before September 30, 2023.

5. What should the public do with the Rs 2,000 denomination banknotes held by them?

Members of the public may approach bank branches for deposit and/or exchange of Rs 2,000 banknotes held by them.

The facility for deposit into accounts and exchange for Rs 2,000 banknotes will be available at all banks until September 30, 2023. The facility for exchange will be available also at the 19 Regional Offices (ROs) of RBI having Issue Departments1 until September 30, 2023.

6. Is there a limit on deposit of Rs 2,000 banknotes into a bank account?

Deposit into bank accounts can be made without restrictions subject to compliance with extant Know Your Customer (KYC) norms and other applicable statutory / regulatory requirements.

7. Is there an operational limit on the amount of Rs 2,000 banknotes that can be exchanged?

Members of the public can exchange Rs 2,000 banknotes up to to a limit of Rs 20,000/- at a time.

8. Can Rs 2,000 banknotes be exchanged through Business Correspondents (BCs)?

Yes, exchange of Rs 2,000 banknotes can be made through BCs up to a limit of Rs 4000/- per day for an account holder.

9. From which date will the exchange facility be available?

To give time to the banks to make preparatory arrangements, members of the public are requested to approach the bank branches or ROs of RBI from May 23, 2023 for availing exchange facility.

10. Is it necessary to be a customer of the bank to exchange Rs 2,000 banknotes from its branches?

No. A non-account holder also can exchange Rs 2,000 banknotes up to a limit of Rs 20,000/- at a time at any bank branch.

11. What if someone needs more than Rs 20,000/- cash for business or other purposes?

Deposit into accounts can be made without restrictions. The Rs 2,000 banknotes can be deposited into bank accounts and cash requirements can be drawn thereafter, against these deposits.

12. Is there any fee to be paid for the exchange facility?

No. The exchange facility shall be provided free of cost.

13. Will there be special arrangements for senior citizens, persons with disabilities, etc. for exchange and deposit?

Banks have been instructed to make arrangements to reduce inconvenience to the senior citizens, persons with disabilities, etc., seeking to exchange/deposit Rs 2,000 banknotes.

14. What will happen if one cannot deposit / exchange Rs 2,000 banknote immediately?

To make the entire process smooth and convenient for the public, a period of over four months has been given for deposit and/or exchange of Rs 2,000 banknotes. Members of the public, are therefore, encouraged to avail this facility at their convenience within the allotted time.

15. What will happen if a bank refuses to exchange / accept deposit of Rs 2,000 banknote?

For redress of grievance in case of deficiency of service, the complainant / aggrieved customer may first approach the concerned bank. If the bank does not respond within a period of 30 days after lodging of the complaint or if the complainant is not satisfied with the response/resolution given by the bank, the complainant can lodge the complaint under the Reserve Bank - Integrated Ombudsman Scheme (RB-IOS), 2021 at the Complaint Management System portal of RBI (cms.rbi.org.in).