After the Reserve Bank of India (RBI) announced that it will withdraw Rs 2,000 notes from circulation while it remains a legal tender, RBI Governor Shaktikanta Das on Monday said that the purpose of printing Rs 2,000 notes has been fulfilled. “Rs 2,000 notes were primarily introduced to quickly replenish earlier Rs 500 and Rs 1,000 notes,” he said. With that purpose fulfilled and there are now enough notes of other denominations, the decision was taken to withdraw these notes. The RBI governor reiterated that this is not demonitisation and that Rs 2,000 notes will remain a legal tender.
He further added, “There is no reason for people to rush to banks for exchange of Rs 2,000 notes” even as the RBI has announced September 30 as the last date for people to exchange or deposit them in their bank accounts. The RBI’s 19 regional offices and other banks will start taking Rs 2,000 notes for exchange with lower denomination ones from May 23. About the September 30 deadline, Das said, “Leaving the deadline open ended will make the exchange of notes an endless process.”
Calling the exchange of the bank notes a part of RBI’s currency management operations, Das said that the security features of the high value currency have not been breached even as he maintained that high-value notes are always more susceptible to cloning, fraud.
A ‘smooth process’ nonetheless?
Shaktikanta Das said that this should be seen as part of RBI’s currency management operations and that its impact on the economy will be ‘very marginal’. “The Indian currency management system is robust, our exchange rates are least volatile amongst peers. In 2013-14, when old notes were exchanged, it was a process to exchange 10 old notes. Would like to reiterate that the Rs 2,000 note is a legal tender,” he said.
On the overall process, Das said that the RBI will see how much of these notes come back to banks and further decision on possible extension of the September 30 deadline will be taken post this. “We expect most of the notes to come back by September 30. Let me assure that people who are abroad and within India, we will be sensitive to the difficulties you may face. It will be our endevour to address the difficulties of people,” Das said while maintaining that introduction of more Rs 500 notes will depend on public demand. He also said that most banks have modified their ATMs and that normally Rs 2,000 notes are not available.