Important for
Prelims: Indian Economy
Mains: General Studies III
Withdrawal of Rs 2000 Note
- The RBI has decided to withdraw the Rs 2000 denomination banknotes from circulation.
- On November 8 2016, the PM of India announced demonetisation, withdrawing two banknotes (Rs 500 and Rs 1000) from circulation with immediate effect.
- The Rs 2000 and the new Rs 500 note were introduced under (Section 26) of the RBI Act 1934, primarily with the objective of meeting the currency requirement of the economy expeditiously.
- The public can continue to use Rs 2000 banknotes for their transactions and also receive them in payment. However, they are encouraged to deposit/exchange these banknotes on or before September 30, 2023. The RBI has not clarified the status of these notes after September 30.
Why Withdrawal ?
- With the fulfilment of the objective, the printing of Rs 2000 notes was stopped in 2018-19.
- The RBI issued the majority of the Rs 2000 denomination notes prior to March 2017 – now at the end of their estimated lifespan of 4-5 years.
- Therefore, in pursuance of the Clean Note Policy of the RBI, it has been decided to withdraw the Rs 2000 denomination banknotes from circulation.
Clean Note Policy
- The policy was introduced in 1999 by the then RBI Governor: Bimal Jalan.
- It seeks to give the public good-quality currency notes and coins with better security features, while soiled notes are withdrawn out of circulation.
- Under the policy, the RBI had earlier decided to withdraw from circulation all banknotes issued prior to 2005 as they have fewer security features.
Practice Questions for Prelims
Consider the following statements :
1. Withdrawal of Rs 2000 note means that it is no longer legal tender.
2. Rise in digital payments is one of the contributing factors towards this decision of RBI.
Which of the above statements is/are correct ?
a) only 1
b) only 2
c) Both 1 and 2
d) Neither 1 nor 2
Ans. b)
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