Can customers still use ₹2000 banknotes for normal transactions? Here's what RBI says
2 min read 20 May 2023, 04:21 PM ISTRBI has asked Indian citizens to either deposit or exchange their ₹2000 banknotes at banks. The exchange will be done free of cost at any bank branch. Even a non-banker can exchange ₹2000 notes at other banks. But what about using ₹2000 notes for normal transactions?
PremiumThe ₹2000 banknotes are axed! RBI has announced four months for bringing India's highest denomination currency into the system either through deposits or exchange at banks. To do so, the deadline is set on September 31, 2023. But does that mean, customers will not be able to use ₹2000 notes for sending or receiving payments or for normal transactions?
The borderline is that even though ₹2000 notes are withdrawn from circulation, yet they will continue to maintain their legal tender status.
RBI said, "The banknotes in ₹2000 denomination will continue to be legal tender."
So can customers use ₹2000 notes for normal transactions? RBI says 'YES'.
RBI added, "Members of the public can continue to use ₹2000 banknotes for their transactions and also receive them in payment."
Read here: If a bank refuses to exchange or accept ₹2000 notes, what actions should customers take?
However, RBI also said, "They are encouraged to deposit and/or exchange these banknotes on or before September 30, 2023."
Deposits of ₹2000 banknotes can be done just like every other normal deposit at a back without restrictions subject to compliance with extant Know Your Customer (KYC) norms and other applicable statutory/regulatory requirements.
But the exchange of ₹2000 banknotes has a limit of ₹20,000 at a time. The exchange process will begin on May 23 and will be available till September 30, 2023.
Read here: What will happen to unclaimed deposits in banks current and savings accounts from June 1?
Through Business Correspondents (BCs), the exchange of ₹2000 banknotes has a limit of ₹4,000 per day for an account holder.
RBI has requested members of the public to approach the bank branches or ROs of RBI from May 23, 2023, for availing of an exchange facility. It also needs to be noted that the exchange facility shall be provided free of cost.
The impact of withdrawal of ₹2000 banknotes will not be as severe as the times of demonisation of old ₹500 and elimination of ₹1000 notes were done in November 2016. The ₹2000 bank notes account only 10.8% of India's currency in circulation unlike 86% demonisation over six years ago!
As per RBI's data, about 89% of ₹2000 notes 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 sharply declined to ₹3.62 lakh crore constituting only 10.8% of notes in circulation as of March 31, 2023 --- from ₹6.73 lakh crore at its peak as on March 31, 2018, which was 37.3% of Notes in Circulation at that time.
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