RBI declared on Friday to withdraw Rs. 2000 notes. These notes can be either deposited to bank accounts or exchanged with other denominators by 30th September 2023.
Why RBI withdraws Rs. 2000 notes?
RBI brought Rs. 2000 notes into circulation in November 2016 after the demonization of Rs. 500 and 1000. The key purpose behind this move was to meet the liquid crunch in the market. Prior to March 2017, around 89% of such notes were issued.
With the adequate availability of the other denominations, RBI stopped printing Rs. 2000 currencies by 2018-19. Lifespan of any currency is normally 4-5 years. And these notes have nearly reached the end of their lifespan. These notes are not commonly used for transactions as there are adequate stock of banknotes of other denominations to meet the currency requirements.
What is the impact of the withdrawal on the economy?
The valuation of the total Rs. 2000 notes in circulation are Rs. 3.62 lakh crore. This represents around 10.8% of the currency in use.
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“This withdrawal will not create any big disruption, as the notes in smaller quantities are in sufficient quantity,” said Nitsure. “Also, in the past 6-7 years, the scope of digital transactions and e-commerce has expanded significantly.”
Meanwhile, former RBI deputy governor R. Gandhi stated that the removal of Rs. 2000 notes would significantly help reduce black money. This move will put those in trouble who have been hoarding high-value currency.
High-denomination notes often lead to illegal activities. Examples include tax evasion and money laundering. With the elimination of Rs. 2000 notes, it will be more difficult for people to use these notes for such evil purposes.
Overall, the RBI’s withdrawal of Rs. 2000 currency is a welcome step. It is a step towards boosting the transparency and efficiency of the Indian economy.
