Reserve Bank Governor Shaktikanta Das on Wednesday said that RBI is monitoring the situation regularly with regard to the withdrawal of Rs 2,000 currency notes and expressed confidence that the entire exercise will be completed in a non-disruptive manner. The Reserve Bank of India (RBI) on Friday announced the withdrawal of Rs 2000 denomination banknotes as part of its currency management and permitted the exchange of Rs 2000 currency notes up to Rs 20,000 in one go from Tuesday onwards.
The exchange or deposit window is available until September 30, 2023. He said that RBI has given four-month time for exchanging as well as depositing the Rs 2,000 currency notes to ensure that there is no hardship faced by anyone. “Yesterday there was no crowd anywhere. And we are monitoring the situation regularly. I don’t think there is any concern or any major issue which is coming out…business activities going on,” he said.
Justifying the deadline, he said unless there is a timeline in any process, it’s not effective. “So you need to give a timeline and we have given sufficient time,” he added. Replying to questions at an event organised by industry body CII, Governor Das said the entire process of withdrawal of the high-denomination currency will be non-disruptive.
“The entire process will be non-disruptive. We have made our analysis about that,” the Governor said. The Rs 2000 notes constitute around 10.8 per cent of total currency in circulation or Rs 3.6 lakh crore. Das said these notes had completed the lifecycle and the purpose has been fulfilled. “It’s not being used in transactions…any high denomination currency just remaining here and there, it has other collateral issues,” he said. These high denomination notes were used for quick replacement of currencies whose legal tender status was withdrawn in 2016, he said.
In a surprise move, the government in 2016 had junked 86 per cent of the currency in circulation by making Rs 500 and Rs 1,000 notes illegal.The fate of Rs 2,000 currency note was sealed even before it was introduced and it had to make its way out as soon as possible and the process of reducing the circulation of Rs 2,000 notes for its eventual phase-out started soon after demonetisation.
The total value of Rs 2,000 currency notes was about Rs 7 lakh crore when an in-principle decision was taken in July-August 2017 to not print any more Rs 2,000 notes. As per the May 19 RBI press release, the printing of Rs 2,000 notes was completely stopped in 2018-19.