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Business News/ Economy / Half of all 2k notes returned
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Half of all ₹2k notes returned

The total value of ₹2,000 banknotes in circulation declined to ₹3.62 trillion or 10.8% of notes in circulation on 31 March from ₹6.73 trillion on 31 March 2018, constituting 37.3% of notes in circulation

On 19 May, RBI announced the withdrawal of ₹2,000 bank notes from circulation, giving people holding these notes until 30 September to deposit or exchange them. (REUTERS)Premium
On 19 May, RBI announced the withdrawal of 2,000 bank notes from circulation, giving people holding these notes until 30 September to deposit or exchange them. (REUTERS)

MUMBAI : Indians have so far returned around half of the 2,000 notes in circulation, with 85% deposited in banks and the remainder exchanged by customers, Reserve Bank of India (RBI) governor Shaktikanta Das said on Thursday.

The total value of 2,000 banknotes in circulation declined to 3.62 trillion or 10.8% of notes in circulation on 31 March from 6.73 trillion on 31 March 2018, constituting 37.3% of notes in circulation, according to RBI data. “After the announcement that we made, so far, about 1.8 trillion of 2,000 notes have come back, and this is roughly 50% of such notes in circulation on 31 March," he said.

Das said RBI is still reconciling the data on how much of this 1.8 trillion has been deposited into bank accounts and how much has been exchanged. However, according to provisional numbers, about 85% of this comes from bank deposits.

“We want to avoid any possibility of double counting and are reconciling the figures. Let me also take this opportunity to say this is more or less in line with our expectations, and the good thing is that there has not been any rush in any of the banks," Das said.

On 19 May, RBI announced the withdrawal of 2,000 bank notes from circulation, giving people holding these notes until 30 September to deposit or exchange them. The central bank cited its ‘Clean Note Policy’ as one of the reasons for this withdrawal. This move was expected to lead to an increase in bank deposits and experts said on Thursday that withdrawing these banknotes would lead to a transient rise in liquidity.

“This move is expected to increase liquidity, at least on a temporary basis. Our estimates show that depending upon the percentage of 2,000 notes deposited in the bank (25%/50%/75%), liquidity may go up by 0.9-2.7 trillion," Sonal Badhan, an economist at Bank of Baroda said in a note on Thursday.

Meanwhile, Das urged people holding 2,000 banknotes not to wait for the last few days before the 30 September deadline.

“I would appeal to everyone not to rush or not to go to the bank in a panic. Go whenever you are free but please avoid the last-minute rush in the last 10-15 days of September," he said.

On citizens outside India at the moment and whether RBI would extend the deadline of 30 September, Das reiterated that RBI is aware that at the individual level or the group level, there could be some problems.

“There are Indians who are travelling abroad. Many of them stay with their children for very long periods of time. There are Indians who are H-1B Visa holders who live abroad. They may have left behind at home certain 2,000 notes," he said.

RBI, Das said, is sensitive to all representations it is getting and will examine them, but the endeavour is to see that nobody is put to any inconvenience.

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ABOUT THE AUTHOR
Shayan Ghosh
Shayan Ghosh is a national editor at Mint reporting on traditional banks and shadow banks. He has over 12 years of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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Published: 08 Jun 2023, 11:36 PM IST
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