DH Deciphers | All you need to know about Rs 2,000 note ban - amount limits, deadline and procedures

The RBI has decided to withdraw Rs 2,000 currency notes from circulation. The exchange facility for Rs 2,000 currency notes will start from May 23, 2023 and will remain open till September 30. In this issue of DH Deciphers, Gyanendra Keshri delves on the procedures involved in deposits and exchange of the currency and things to watch out for.

What do I need to do if I have Rs 2,000 notes?

You can either deposit it in your bank account or get it exchanged with other denominations. Whichever bank you have an account with, the money can be deposited in the usual manner. However, it will be subject to compliance with extant Know Your Customer (KYC) norms and other applicable Statutory requirements. The banks shall also be required to comply with Cash Transaction Reporting (CTR) and Suspicious Transaction Reporting (STR) requirements, where applicable, the RBI has said.

Also Read: No need to rush to banks: RBI's Shaktikanta Das on Rs 2,000 notes withdrawal

What if I don’t have a bank account or I don’t want to deposit the money in my account?

If you can't deposit the money in your bank account, you can exchange it. You don’t need to be an account holder to exchange the banknotes. The facility of exchange of Rs 2,000 banknotes across the counter shall be provided to the public in the usual manner, that is, as was being provided earlier, the RBI said in a circular addressed to heads of all banks. So, the Rs 2,000 banknotes can be exchanged into banknotes of other denominations at any bank branch. Besides this, the currency exchange facility would also be provided at the 19 regional offices of the RBI.

Is there any time limit to exchange or deposit the currency?

Yes. The RBI has set September 30, 2023 as the deadline. The exchange facility will start on 23rd May 2023.

What is the limit on deposits and exchange of currency?

Ten notes of Rs 2,000 denomination can be exchanged at a time at any bank branch or RBI’s regional offices. So the amount limit is Rs 20,000. Business Correspondents (BCs) will also be allowed to exchange Rs 2000 banknotes upto a limit of Rs 4,000/- per day for an account holder. There is no such limit for deposits in account.

Also Read: The ripples from the withdrawal of Rs 2,000 notes

Can Rs 2,000 banknotes still be used for normal transactions?

Rs 2000 notes remain a legal tender. So people can continue to use Rs 2000 banknotes for their transactions and also receive them in payments.

What are the rules regarding introduction of new currency?

Under Section 24(1) of the RBI Act, 1934, the central bank is empowered to issue notes of any denomination not exceeding Rs 10,000. The Rs 2,000 denomination banknote was introduced in November 2016. According to the RBI, the objective of the introduction of Rs 2000 note was to meet the currency requirement of the economy in an expeditious manner after withdrawal of the legal tender status of all Rs 500 and Rs 1,000 banknotes in circulation at that time.

Is withdrawal of Rs 2,000 notes similar to the 2016 demonetisation process?

In the 2016 demonetisation exercise, all Rs 500 and Rs 1000 currency notes were declared invalid overnight. Whereas the Rs 2,000 notes are only being withdrawn from circulation. It remains legal tender. This means the Rs 2,000 notes have not become invalid. Rs 500 and Rs 1000 notes constituted around 86 per cent of the currency in circulation when the demonetisation was announced by Prime Minister Narendra Modi on November 8, 2016. Rs 2,000 constitutes a small proportion. As on 31st March 2023, Rs 2,000 notes constituted 10.8 per cent of currency in circulation.