RBI(Reserve Bank of India) directed the 2000 Note Ban for all the private sector and Public sector banks and the general public about the Rs.2000/- Notes ban on 19th of May, 2023. The public can exchange their notes at the banks. This is the second time banning the notes by the Reserve Bank of India or the Government of India. You can deposit the banned notes into your bank accounts or exchange them for other denomination currencies with the banks. The banks will not accept the usage of current Rs.2000/- notes after September 30th, 2023, which means you must deposit or exchange all the current Rs.2000/- notes with banks before September 30th of this year.
Reason For Note Ban Of Rs.2000/- Notes:
- In November 2016, the government introduced the Rs.2000/- notes following the ban on the old model Rs.1000 and Rs.500 notes. However, the production of Rs.2000/- notes was suspended between 2018 and 2019. The majority of the Rs.2000/- notes were issued by the government before March 2017.
- The main reason behind the Rs.2000/- notes ban is that the life span of the material of the Rs.2000/- notes is only four to five years. So they need to be changed before they are damaged.
- The Rs.2000/- notes were called back under the “Clean Note Policy” of the government of India or Reserve Bank of India.
- The Reserve Bank of India introduces the Clean Note Policy to keep only the note of good quality under use or circulation in the market or among the public.
Limit For Exchange Of Rs.2000/- Banned Notes:
The Reserve Bank of India banned the Rs.2000/- notes and directed the public to exchange the notes with banks recognized by RBI per the specified rules. It specified a rule that the public could exchange 2000 rupees with other denomination notes up to Rs20,000/- per day. The Rs.2000/- notes can be exchanged at the banks from the 23rd of May. The RBI also notified that the public could use and deposit the notes before the 30th of September 2023. No one will accept the Rs.2000/- Notes after 30th September 2023 as they will no longer hold any value.
History Of Currency Notes Ban & Issuance Of New Notes In INDIA:
On the 8th of November in 2016, the Government of India was notified about the Demonitisation. They announced the demonetization of all the Rs500 notes and Rs1000 notes with the image of Mahatma Gandhi. It asked the public to deposit all the demonetized notes. The main reason behind the 2016 Demonetisation is to stop the supply of RS500 and Rs.2000/- notes which increased by a huge percentage between 2011 and 2016, and also to pull out the crores of black money in the name of currency exchange. Later, the Rs500 and Rs1000 notes were replaced by new Rs500 notes and Rs.2000/- notes.
Reasons For Demonetisation:
- The government or Reserve Bank of India may choose to demonetize or ban the notes for only one of the following reasons:
- To get control over situations like currency getting out of control due to inflation or hyperinflation.
- To prevent some types of criminal or illegal actions. (Like terrorism, tax evasion, counterfeiting, illegal transactions at a huge level, duplicate notes, etc.)
- To bring the new currency with new notes and coins along with new standards.
Advantages Of Demonetization – Rs.2000/- Note Ban:
- It can Reduce the number of Criminal activities that depend on money transactions. As the notes become value less after the ban or demonetisation, the transactions for illegal activities will abort in the middle.
- It becomes a punishment to the people who will not pay the taxes to the government. When the government announces a currency ban, the people who store money illegally without paying the tax cannot exchange all the money they have. This becomes an advantage to the government.
- It promotes cashless transactions as people may fear currency notes ban when the money is in their hands. Also, they keep the money in bank accounts and use only cashless transactions.
Disadvantages Of Demonetisation – Rs.2000/- Note Ban:
- The general public must queue for hours at the banks to exchange the old currency with the new one.
- People may become cashless once a new currency has been brought into circulation and need help buying necessities.
- Printing new currency becomes a new financial burden to the Government of India.
- This may lead to the discontinuation of many financial activities in the country.
- The people unaware of the demonetisation announcement may not exchange the currency and will lose money.
Rs.2000/- Note Ban – Demonetisation:
The Reserve Bank of India (RBI) has decided to ban Rs.2000 notes. This means that all the notes valued at Rs.2000 will not be available from September. They banned the notes because their life span is only four to five years, and they must change them by 2023. The public can exchange these notes at their bank in any other denomination. The exchange for any other denomination can be done for any value up to Rs.20,000/-. The public can also deposit these notes into their bank accounts from the 23rd of May, which will later become invalid by 2023.
This means the public will no longer be able to use these notes. The public can exchange their notes at the banks. The banks should know that the exchange will occur at different rates in different denominations. The public will also be able to deposit these notes into their bank accounts.