Withdrawal of Rs 2,000 notes part of currency management, says RBI Governor
Shaktikanta Das said Rs 2,000 rupee notes were introduced primarily to replenish the currency that was withdrawn following the 2016 demonetization.
NEW DELHI: Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday said most of the withdrawn Rs 2,000 rupee notes are expected to be returned by the deadline of September 30.
Speaking to reporters for the first time since the surprise decision to withdraw the highest denomination currency note was announced, Das said the decision was part of currency management.
Rs 2,000 currency notes continue to be legal tender, Das added.
Indian currency management system is very robust, the exchange rate has remained stable despite the crisis in financial markets due to war in Ukraine and failure of certain banks in the West, he said.
The impact of the withdrawal on the economy will be “very very marginal”, he said, adding Rs 2,000 currency notes made up for just 10.8 per cent of the total currency in circulation.
He said Rs 2,000 rupee notes were introduced primarily to replenish the currency that was withdrawn following the 2016 demonetisation.
While the withdrawn 2,000 rupee notes can either be deposited in bank accounts or exchanged for other currency, banks have been advised to make necessary arrangements for exchange, he said.
“We expect most of Rs 2,000 bank notes to come back to the exchequer by September 30,” he said.
“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. We have sufficient stocks, no need to worry.”
Das said that the RBI will be sensitive to difficulties faced by people and would come out with regulations if need be. The existing income tax requirement of furnishing PAN for deposits of Rs 50,000 or more in bank accounts will continue to apply for deposits of the withdrawn 2000 rupee notes, he said.
Das said liquidity in the system is being monitored on a daily basis.
Meanwhile, the Central Bank also advised banks to provide shade from the sun and water to customers waiting to exchange or deposit Rs 2,000 notes.
It can be noted that during the note ban in 2016, there were allegations of customers dying while waiting in queues to exchange bank notes.
Following Friday’s announcement of withdrawing Rs 2,000 notes — the notes continue to be legal tender unlike the demonetisation exercise — there were concerns about customers facing inconvenience, especially given the summer being at its peak.
“Banks are advised to provide appropriate infrastructure at the branches such as shaded waiting space, drinking water facilities, etc. considering the summer season,” RBI said in a notification on Monday.
It asked banks to provide the note exchange facility across the counter to the public in the usual manner, that is, as was being provided earlier. The banking regulator also asked banks to maintain daily data on deposits and exchange of Rs 2,000 notes.
Key remarks from RBI Governor’s address:
- Rs 2000 notes were introduced to replenish notes withdrawn following demonetisation
- Withdrawal of Rs 2,000 bank notes part of currency management
- Reluctance among merchants to accept Rs 2,000 notes may have increased after the withdrawal
- Expect most of Rs 2,000 notes to come back to exchequer by September 30
- Banks have been advised to make necessary arrangements for exchange of Rs 2,000 notes
- RBI will be sensitive to difficulties faced by people regarding exchange of Rs 2,000 notes
- Existing Income Tax requirement of PAN for Rs 50,000 or more deposits in bank accounts will apply on Rs 2,000 notes as well
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