Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday addressed recent speculation surrounding the reintroduction of Rs 1,000 banknotes and categorically denied the existence of any such proposal. Governor Das dismissed the reports as speculative, reaffirming that there are no immediate plans to bring back the Rs 1,000 denomination.
Responding to a question raised during the press conference, Governor Das stated, "That's speculative. There's no such proposal right now." His remarks aimed to dispel the circulating rumors and clarify the RBI's position on the matter.
The Rs 2,000 denomination was introduced in November 2016 as part of the demonetisation exercise aimed at rapidly replenishing the currency in circulation after the withdrawal of Rs 1,000 and Rs 500 notes. During the demonetisation initiative, the legal tender status of existing Rs 1,000 and Rs 500 banknotes was withdrawn, resulting in the removal of Rs 10 lakh crore from circulation overnight. To address the urgent need for currency in the economy, the RBI introduced the Rs 2,000 banknote to facilitate the swift replenishment of monetary value.
"With fulfilment of that objective and availability of banknotes in other denominations in adequate quantities, printing of Rs 2000 banknotes was stopped in 2018-19," RBI said.
"Rs 2,000 notes were primarily introduced to quickly replenish earlier Rs 500 and Rs 1,000 notes. They have been withdrawn from circulation, but it is still legal tender," Das said while addressing reporters for the first time since the surprise decision to withdraw the highest denomination currency note was announced.
According to the Central Bank, the majority of Rs 2,000 banknotes, approximately 89 percent, were issued prior to March 2017 and are currently approaching the end of their estimated lifespan of four to five years.
The RBI said that the total value of Rs 2,000 banknotes in circulation reached its peak at Rs 6.73 lakh crore as of March 31, 2018, accounting for 37.3 percent of the overall Notes in Circulation at that time. However, as of March 31, 2023, the value of Rs 2,000 notes has reduced significantly to Rs 3.62 lakh crore, representing only 10.8 percent of the notes in circulation.
On the impact of the withdrawal on the economy, Das said that it would be "very very marginal", adding Rs 2,000 currency notes made up for just 10.8 percent of the total currency in circulation.
"We expect most of the Rs 2,000 banknotes to come back to the exchequer by September 30. We have more than adequate quantities of printed notes already available in the system, not just with RBI but with currency chests operated by banks. There is no reason to worry. RBI is sensitive to difficulties faced by people and would come out with regulations if need be," Das said.
For the exchange of notes, Das said that the same procedure will be followed as banks do for deposits. He added that most banks have already modified their ATMs and typically Rs 2,000 notes are not available.
RBI on Friday in a surprise move announced the withdrawal of Rs 2,000 currency notes from circulation but gave the public time till September 30 to either deposit such notes in accounts or exchange them at banks. Unlike the November 2016 shock of demonetisation, when old Rs 500 and Rs 1,000 notes were invalidated overnight, the Rs 2,000 notes will continue to be legal tender.
