RBI to withdraw Rs 2,000 notes from circulation

Beginning May 23, notes can be exchanged, deposited till September 30

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In a surprise move, the Reserve Bank on Friday announced withdrawal of Rs 2,000 currency notes from circulation but gave public time till September 30 to either deposit such notes in accounts or exchange them at banks.

Unlike the November 2016 shock demonetisation when old Rs 500 and Rs 1,000 notes were invalidated overnight, the Rs 2,000 notes will continue to be a legal tender till September 30.

The Reserve Bank of India (RBI), however, did not say what would be the status of 2,000 notes in private hands after September 30. Earlier, the government had made it an offence to hold the demonetised Rs 500 and 1,000 notes after expiry of the deposit deadlines.

Banks will exchange the Rs 2,000 notes till September 30 and people holding notes beyond the specified date will not invite legal action, sources said.

In an interview to a news channel, Finance Secretary T V Somanathan said the decision is different from demonetisation of high-value currency notes of 2016 and will have no impact on the economy.

When asked on what will happen to the currency notes not deposited before September 30, he said banks will have a proper system to handle it.

Former Finance Secretary SC Garg said the latest move is aimed at reducing dependence on high denomination currency notes and promote digital payments.