Farewell to the Purple Titans

- RBI's Bold Move to Retire Rs 2000 Banknotes & Reaction Of political Parties and Things that You Need to Know:

The Rs 2,000 banknotes will no longer be in circulation, the Reserve Bank of India (RBI) stated on Friday, May 19. The central bank asked all to deposit the Rs 2,000 banknotes into their accounts or exchange them for banknotes of other denominations at any bank branch by September 30, 2023. There are no restrictions on how you deposit money into a bank account. The RBI announced that the exchange service for Rs 2,000 notes will begin on May 23, 2023. Do not forget that the current Rs. 2,000 banknotes will remain valid forms of payment as legal tender.

The RBI gave the following justification for the decision: "About 89% of the banknotes in the denomination of Rs. 2000 were issued prior to March 2017 and are nearing the end of their expected life span of 4-5 years. The total value of these banknotes in circulation has decreased from its peak of 6.73 lakh crore as of March 31, 2018 (37.3% of Notes in Circulation) to its lowest point of 3.62 lakh crore as of March 31, 2023, which represents only 10.8% of Notes in Circulation. Additionally, it has been noted that transactions involving this denomination are uncommon. Additionally, the supply of banknotes in other denominations is still sufficient to meet the public's need for currency.

The central bank said, "Starting from May 23, 2023, exchanges of Rs 2000 banknotes into banknotes of other denominations can be made up to a limit of 20,000/- at a time at any bank, ensuring operational convenience and avoiding disruption of regular activities of bank branches." Additionally, starting on May 23, the 19 Regional Offices of the RBI with issuing divisions will offer the ability to swap Rs 2,000 bank notes up to the maximum of Rs 20,000 at a time.

According to the Annual Reports of RBI presented before the Parliament by Finance Minister Nirmala Sitharaman in March, the total value of Rs 500 and Rs 2,000 denomination banknotes in circulation as of end-March 2017 and as of March-end 2022 was Rs 9.512 lakh crore and Rs 27.057 lakh crore.

Latest RBI Guideline for banks:

The Reserve Bank of India's Friday announcement to remove Rs 2,000 notes from circulation drew a range of responses from the business community and political parties. While several business leaders predicted it would happen eventually, the opposition used the situation to make fun of the Centre government led by Prime Minister Narendra Modi.

How various Political Parties and industries react to it:

Vimal Nadar, Head of Research at Colliers India, said that the note ban was on expected lines. He added, "The withdrawal of INR 2000 rupee-denominated notes is an expected and timely move towards prudent currency management within the realm of maintaining banking & financial discipline. Such measures further reduce/ eliminate the probable cash component in high-value real estate transactions. In the last few years, RERA & demonetization have brought in significant levels of transparency in real estate, mainly contributing to fair market price determination."

Principle Opposition party Congress has targeted PM Modi over the withdrawal of Rs 2,000 currency notes from circulation. The grand-old party has said that the move is "typical of our self-styled vishwaguru" and his method of "first act, second think."

Former Finance Minister P Chidambaram tweeted saying demonetization has come full circle with the move to ban Rs 2000 currency notes. He tweeted: "As expected, the government/RBI have withdrawn the Rs 2000 note and given time until September 30 to exchange the notes. The Rs 2000 note is hardly a popular medium of exchange. We said this in November 2016 and we have been proved correct. The Rs 2000 note was a band-aid to cover up the foolish decision of demonetizing Rs 500 and Rs 1000 notes which were popular and widely exchanged currencies."

All these Questions and Answers to know:

1. Why are Rs 2000 notes being withdrawn?

The Rs 2000 notes are being withdrawn because they were introduced in 2016 to meet the demand for currency after the withdrawal of Rs 500 and Rs 1000 notes. Now that there are enough other denominations available, the printing of Rs 2000 notes has been stopped. Also, these notes are not commonly used for transactions, and most of them are nearing the end of their lifespan. So, as part of the Clean Note Policy, the decision has been made to withdraw them from circulation.

2. What is the Clean Note Policy?

The Clean Note Policy is a policy by the Reserve Bank of India (RBI) that aims to ensure that people have access to good-quality banknotes.

3. Do Rs 2000 notes still remain legal tender?

Yes, Rs 2000 notes are still considered legal tender, which means they can still be used for transactions.

4. Can I use Rs 2000 notes for normal transactions?

Yes, you can continue to use Rs 2000 notes for your transactions and receive them as payment. However, it is recommended to deposit or exchange these notes by September 30, 2023.

5. What should I do with my Rs 2000 notes?

You can go to a bank branch to deposit or exchange your Rs 2000 notes. The facility for deposit and exchange will be available at all banks until September 30, 2023. You can also exchange them at the Regional Offices of RBI until that date.

6. Is there a limit on depositing Rs 2000 notes into a bank account?

You can deposit Rs 2000 notes into your bank account without any restrictions, as long as you comply with the Know Your Customer (KYC) norms and other applicable requirements.

- Kishan Jaiswal