Why has RBI set September 30 deadline to exchange ₹2000 notes? Governor Shaktikanta Das explains
2 min read 22 May 2023, 12:38 PM ISTRBI Governor Shaktikanta Das said that the impact of the withdrawal on the Indian economy will be ‘very very marginal’ as ₹2,000 currency notes made up for just 10.8% of the total currency in circulation.
PremiumThe Reserve Bank of India is expecting the return of most ₹2,000 notes by September 30, said RBI Governor Shaktikanta Das while speaking to media persons for the first time since the surprise decision to withdraw the highest denomination currency note was announced.
“Most of the withdrawn ₹2,000 rupee notes are expected to be returned by the deadline of September 30. The decision was part of currency management. ₹2,000 currency notes continue to be legal tender," Das said.
He also said that the deadline of September 30 for the exchange of ₹2000 notes was decided so that people take the process seriously and it does not become endless.
"...Time is given up to Sept 30 (for exchange of notes) so that it is taken seriously, otherwise, if you leave it open-ended, it becomes a kind of an endless process," Shaktikanta Das said in an interaction with the media.
“We have clearly explained in our press note that the ₹2000 notes were primarily issued for the purpose of quickly replenishing the value of money which was being taken out from the system when the legal tender status of then-prevailing ₹1000 and ₹500 notes was withdrawn..(demonetization). That purpose has been fulfilled, today there are enough notes in circulation, of other denominations," he added.
He stated that the Indian currency management system is very robust, and the exchange rate has remained stable despite the crisis in financial markets due to the Ukraine war and the failure of certain banks in the West, PTI reported.
Das said that the impact of the withdrawal on the Indian economy will be ‘very very marginal’ as ₹2,000 currency notes made up for just 10.8% of the total currency in circulation.
He added that ₹2,000 rupee notes were introduced primarily to replenish the currency that was withdrawn following the 2016 demonetization.
While the withdrawn 2,000 rupee notes can either be deposited in bank accounts or exchanged for other currency, banks have been advised to make necessary arrangements for exchange, he said.
“We expect most of the ₹2,000 banknotes to come back to the exchequer by September 30. We have more than adequate quantities of printed notes already available in the system, not just with RBI but with currency chests operated by banks. There is no reason to worry. We have sufficient stocks, no need to worry," the RBI Governor further said.
RBI, he said, was sensitive to difficulties faced by people and would come out with regulations if need be.
“The existing income tax requirement of furnishing PAN for deposits of ₹50,000 or more in bank accounts will continue to apply for deposits of the withdrawn 2000 rupee notes," he said, adding that liquidity in the system is being monitored on a daily basis.
(With PTI inputs)
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