RBI Says 88% Of Banned Rs 2,000 Banknotes Returned To Banks Majorly Via Deposits

The Reserve Bank of India (RBI) on Tuesday announced that 88% of the high denomination banknote Rs 2,000 which was banned in late-May month, has returned to the system. Now, only Rs 42,000 crore worth of Rs 2000 banknotes are in circulation across India. RBI's data showed that the majority of Rs 2000 notes which returned were through deposits.

As per RBI's statement on August 1, 2023, the total value of Rs 2000 banknotes which were in circulation, declined to Rs 3.56 lakh crore as of May 19, 2023, compared to the value of Rs 3.62 lakh crore as of March 31, 2023.

RBI announced the withdrawal of Rs 2000 banknotes in circulation with effect from May 19, 2023.

From the data received from the banks, RBI said, the total value of ₹2000 banknotes received back from circulation is ₹3.14 lakh crore up to July 31, 2023. Consequently, ₹2000 banknotes in circulation as of the close of business on July 31 stood at ₹0.42 lakh crore.

Thus, it said, "88% of the ₹2000 banknotes in circulation as of May 19, 2023, have since been returned."

Further, the data revealed that out of the Rs 2,000 banknotes received back from circulation at banks, 87% is in the form of deposits and the remaining 13% has been exchanged into other denomination banknotes.

"Members of the public are requested to utilise the next two months to deposit and/or exchange the ₹2000 banknotes held with them to avoid any rush in the last few days before September 30, 2023," RBI added.

When announcing the withdrawal of Rs2000 denominations in India, RBI on May 19, highlighted that about 89% of the ₹2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life span of 4-5 years. The total value of these banknotes in circulation has declined from ₹6.73 lakh crore at its peak of March 31, 2018 (37.3% of Notes in Circulation) to ₹3.62 lakh crore constituting only 10.8% of Notes in Circulation on March 31, 2023.

The reason behind introducing this highest denomination currency was primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of the legal tender status of all ₹500 and ₹1000 banknotes in circulation during November 2016.

However, in the following years, RBI observed that this denomination was 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.

Hence, RBI decided to withdraw the ₹2000 denomination banknotes from circulation.

RBI has given time till September 30, 2023, to deposit and/or exchange the ₹2000 banknotes.