Credit and finance for MSMEs: Rs 2000 banknote was introduced in November 2016 primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of the legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time, according to RBI.
Credit and finance for MSMEs: The Reserve Bank of India’s (RBI) decision to withdraw Rs 2000 denomination banknotes from circulation won’t have any impact on traders, said traders’ body Confederation of All India Traders (CAIT). In a statement following the central bank’s announcement on Friday, the confederation maintained that “there will be no disturbance in trade of traders.”
“The RBI has taken sufficient steps to ensure smooth transactions in business by declaring Rs 2000 to remain as a legal tender and by providing a window of four months for exchanging Rs 2000 notes with smaller denomination notes,” said CAIT National President B C Bhartia and Secretary General Praveen Khandelwal.
Rs 2000 banknote was introduced in November 2016 primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of the legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time. The objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities and therefore, the printing of Rs 2000 banknotes was stopped in 2018-19, RBI said in its announcement.
Importantly, the total value of Rs 2000 banknotes in circulation had dropped from Rs 6.73 lakh crore at its peak as of March 2018 constituting 37.3 per cent of notes in circulation to Rs 3.62 lakh crore with only 10.8 per cent share in notes in circulation as of March 2023. The RBI said Rs 2000 notes were not commonly used for transactions.
“The RBI order regarding currency notes of Rs 2000 is a right step in the direction of motivating and encouraging citizens to accept and adopt digital payments in their day-to-day purchasing. CAIT has been actively advocating acceptance of digital payments among the trading community for last many years,” it said.
The central bank has already asked banks to stop issuing Rs 2000 notes with immediate effect and existing ones can be deposited or exchanged for notes of other denominations at any bank branch till September 30 this year. Importantly, the Rs 2000 denomination notes will continue to be legal tender.
