₹2,000 notes to be withdrawn: Key things to know before you exchange them

The Reserve Bank of India (RBI) on Friday announced that it has decided to withdraw ₹2,000 notes from circulation. Those who possess these notes can exchange them until Sept 30, 2023 for the notes of smaller denominations starting May 23.

The RBI has set a limit of ₹20,000 to exchange these notes at a bank. The banking regulator has also told banks to stop issuing ₹2,000 notes with immediate effect.

“With a view to minimise inconvenience to the public, to ensure operational convenience and avoid disruption of the regular activities of bank branches, all banks may exchange ₹2,000 banknotes up to a limit of ₹20,000 at a time,” states the RBI statement.

The statement further highlights that this is being done because the notes have completed their lifespan and are not used for transactions anymore. Also, the RBI intends to adhere to ‘Clean Note Policy’.

“Majority of the ₹2,000 denomination notes were issued prior to March 2017, have completed their estimated lifespan and are not observed to be commonly used for transactions anymore,” reads the statement.

Key things to know regarding withdrawal of notes:

1. You can exchange your ₹2,000 notes between May 23 to September 30 from any bank branch.

2. The facility of exchange of notes will also be available at 19 regional offices of RBI.

3. The RBI has set a limit for the exchange of notes. One can exchange up to ₹20,000 in one day from one bank branch.

4. The other option is to approach a Business Correspondent, an extended arm of a bank branch -- usually seen in unbanked towns and villages. The maximum limit to exchange notes via BCs is ₹4,000.

5. It is interesting to note that one does not need to be a customer to be able to exchange notes. One can simply walk into a bank to exchange them.

6. These notes are fewer than seven years old. The RBI started printing ₹2,000 notes in November 2016 after ₹500 and ₹1,000 notes were demonetised.

7. This withdrawal of notes is different from what was seen in 2016. That time, withdrawal was instant and the status of legal tender was withdrawn with immediate effect. On the contrary, one can continue to use these notes, although the public at large is encouraged to deposit them in banks.

8. There is no restriction on deposits into a bank account. For instance, if one has ₹2,000 notes amounting to ₹2 lakh, then instead of exchanging them for ₹20,000 on a daily basis for the next 10 days, one can simply deposit the sum in his bank account and withdraw from an ATM later as and when the need arises.

9. Around 89 percent of these notes were printed before March 2017. Total value of these notes is around 10.8 percent of notes in circulation on Mar 31, 2023.

10. RBI stated that the notes are not being used commonly for transactions.