The ₹2000 banknote of Mahatma Gandhi’s new series was introduced in November 2016; it is the highest form of physical legal tender in India. It was announced the same day the government of India announced the demonetization of ₹1000 and ₹500 banknotes. The decision of demonetization was announced by P.M Narendra Modi on 8th November 2016 as a way to curb corruption, black money, and counterfeit money which was in circulation and disrupting illegal activities, increase the use of cashless transactions like UPI, and also a way to reduce effects of shadow economy. The 2000 note ban in India aimed to curb black money and promote digital transactions.
Background (2000 note ban)
The ₹2000 or ~USD 25 was released by the Reserve Bank of India on 8th November 2016 shortly after the announcement by P.M Narendra Modi and circulation started on 10th November 2016; this swift introduction was aimed at filling the gap left by the invalidated high-denomination notes. It was created basically as a stopgap to ensure enough cash for circulation, especially in times when millions of Indians were trying to get their demonetized notes of rupee 500 and 1000 exchanged. The 2000 note ban in India aimed to curb black money and promote digital transactions. The legal basis which allows the central government to demonetization is in Section 26(2) of the Reserve Bank of India Act, 1934
Physical and security features
₹2000 banknote measures 166 x 66 mm and is primarily magenta in color. The front side of the note prominently features a portrait of Mahatma Gandhi with the Reserve Bank of India seal. The note displays the denomination value of “2000” in several languages, including Devanagari, English, and another regional script. The year of printing and the signature of the RBI Governor are also present on this side. The reverse side of the note showcases a mesmerizing image of the Mangalyaan, India’s Mars Orbiter Mission, The Swachh Bharat Abhiyan logo and slogan are featured on the note.
To prevent counterfeiting, the 2000 rupee note incorporates advanced security features, including color-shifting ink, a watermark, a security thread, and raised printing. It also has features for the visually impaired for easy identification.
Demonetization of ₹2000 banknote
On May 19, 2023, the Reserve Bank of India announced that it would withdraw ₹2000 from circulation. However, it would still remain as a legal tender until 30th September, 2023 and individuals can deposit and exchange the notes until then. This announcement was made by the Reserve Bank of India unlike in demonetization of ₹500 and ₹1000 where the central government of India made the announcement. On 1 September 2023, the Reserve Bank of India informed that 93% of Rs 2,000 notes, worth Rs 3.32 lakh crore have been returned to the banking system.
Reasons for demonetization in this case
This move was part of the Clean India Policy, which aims to give the citizens good quality currency notes and coins while the spoiled and damaged currency is withdrawn out of circulation. A total currency of ₹18,037 billion was in circulation at the end of March 2018.
The ₹2000 banknote initially was also a stopgap so enough currency was in circulation when Indian people were trying to exchange their notes. The banknote completed its objective, and when lower currency notes were in mass use and the citizens were not seeing any problems in regard to deficiency of physical notes, RBI stopped its production entirely in the fiscal year 2019-2022.
There were also rumors that ₹2000 was being used for hoarding and tax evasion which further pressurized the RBI to withdraw the currency.
How to Exchange and Other Limits Rs 2000 Notes in Bank
1)People can go to any Bank branch, though going to a bank where you have an account is recommended so as to streamline the exchange process.
2)The bank would then provide you with a request slip to be filled in order to facilitate the exchange process of ₹2000 notes.
3)The individual would have to provide the “Tenderer name” and fill Unique Identification Number. Some original IDs need to be present during the process like Driver’s license, Aadhar card, Voter card ID, Passport, NREGA card or population register.
4) Then total number of notes being exchanged along with the total value of the money being exchanged.
5) Mention the date and place where the process is taking place and then submit it.
The notes would have to be exchanged by 30 September 2023. Reserve Bank of India doesn’t list any limit on the amount that can be exchanged but without restrictions subject to compliance with extant Know Your Customer (KYC) norms and other applicable statutory/regulatory requirements. So, different facilities or banks may have their own charges for exchange. A non-account holder can exchange banknotes for up to rupees 20,000 at a time at any bank.
Conclusion
The decision was unsurprising since production had already stopped in fiscal year 2019-2022. The impact of the demonetization of rupees in 2000 would be very meager since this banknote only represented only 10.8% of the currency in circulation. It will not cause much disruption in the Indian economy or in the lives of citizens as smaller denominations are also already in wide circulation and online transactions like UPI are already widespread. The ₹2000 banknote had a significant role in India’s financial history, serving both as a stopgap measure during a period of monetary transition and later as part of a broader effort to maintain the quality and integrity of the nation’s currency. On an ending note, the banknote played its role well and served its objective before departing.
This Blog is Written By Aditya Sahijpal.
