The Reserve Bank of India (RBI) on Friday announced the withdrawal of Rs 2,000 currency notes from circulation. Following the announcement, people were instructed to either deposit existing Rs 2000 notes in their bank accounts or exchange them at the banks.
But, what happens to currency notes that go out of the system? And what does the RBI do with the old currency notes?
The RBI will have to destroy several Rs 2000 notes after it scrapped the high-value denomination under its clean note policy.
The central bank regularly purges soiled and mutilated currency notes of different denominations and replaces them with fresh, new notes. Similarly, when a currency is withdrawn from circulation, the notes are withdrawn and shredded.
They are shredded to a point where they can no longer be reconstructed. The result, however, does not go to waste. The shredded notes then passes through a humidifier and is converted into briquettes. These are generally dumped in vast landfills.
As per reports, sometimes the shredded notes are also recycled to make files, calendars and paper weights and ballpoint pen shells, tea coasters, cups and small trays as souvenirs for guests.
As per the RBI, notes of Rs 2,000 denomination make up 10.8 per cent of the total currency in circulation.
Rs 2,000 rupee notes were introduced primarily to replenish the currency that was withdrawn following 2016 demonetisation, the RBI said.