Business News/ Industry / Banking/  No ID proof required for 2,000 note exchange

NEW DELHI : No identity proof will be demanded by banks for exchange of 2000 bank notes and there is no cap on the number of times one could get this done in a day, an official informed about the procedure banks will follow said.

Banks will start the facility of exchange of 2000 notes from Tuesday as mandated by the RBI last week. The person quoted above said citing an instruction issued by a state-owned bank to its local head offices that no identity proof is required to be submitted by the tenderer at the time of the exchange.

"No form or slip of any nature has been prescribed by the RBI or banks for exchange of 2000 notes, which is one time, upto 20,000... There is no restriction on the tenderer on the number of times he can stand in the queue," said the person, explaining that the limit of exchanging ten bank notes at a time was meant to manage crowds at banks. No requisitions slips are required and the bank's instructions are clear, the person said.

However, the RBI's frequently asked questions issued last week explains that in the case of bank deposits, on which, the 20,000 cap is not applicable, compliance with extant know your customer (KYC) norms and other statutory/ regulatory requirements is required. Bank deposit facility without a ceiling is offered so that those wishing to deposit larger amounts could do so and withdraw funds in other currency denominations.

There was no formal reply to an email sent to the finance ministry on Sunday on whether Permanent Account Number or Aadhaar needs to be quoted at the time of deposit or exchange till the time of publishing.

As per official estimates, the total value of 2000 denomination bank notes in circulation has declined from 6.73 trillion at its peak as on 31 March 2018 accounting for 37.3% of the notes in circulation to 3.62 trillion constituting only 10.8% of the notes in circulation on 31 March 2023. RBI also says that this denomination is not commonly used for transactions.

As per the RBI decision, the high value denomination remains a legal tender despite its withdrawal from circulation and people have time till end of September to get these exchanged.

The idea is to make the phasing out of this denomination smooth for the public but the decision did stir up criticism from political parties. West Bengal Chief Minister Mamata Banerjee called the decision a whimsical drama, in a tweet on Saturday. "'Such misadventures by an oligarchic and authoritarian government will not be forgotten by the people at large at the time of reckoning," Banerjee warned in her tweet. 

Gireesh Chandra Prasad
Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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Updated: 22 May 2023, 07:59 AM IST
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