In less than a week, India's highest denomination banknote, the Rs 2,000 note, is scheduled to be phased out, with approximately Rs 24,000 crore ($2.9 billion) worth of these notes still in circulation.
The Reserve Bank of India (RBI) commenced the withdrawal of the Rs 2,000 notes on May 19, allowing individuals to exchange or deposit them in banks until the end of September. While the majority of the initially issued Rs 3.56 trillion has been reconciled, as of September 1, 7% of these notes remain unredeemed.
Introduced in November 2016 as part of a remonetization effort, the pink-hued Rs 2,000 note became a popular choice for storing value and facilitating large cash transactions following the sudden demonetization of 1,000 and 500 rupee notes.
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Individuals can continue to deposit or exchange these notes into their bank accounts until September 30. This service is available at both RBI branches and banks across the country since May 23. To minimize disruption to regular bank operations, exchanges of Rs 2,000 notes are restricted to a maximum value of Rs 20,000, subject to Know Your Customer (KYC) requirements and legal deposit procedures.
According to RBI data as of early September, 93% of the Rs 2,000 notes that were removed from circulation have been returned to banks. As of August 31, 2023, the total value of Rs 2,000 notes deposited in banks amounted to Rs 3.32 lakh crore, leaving only Rs 0.24 lakh crore worth of these notes in circulation on that date.
It's important to note that these notes will remain legal tender even after September 30, but they will no longer be accepted for transactions and can only be exchanged with the RBI.