Rs 2,000 denomination notes owes its origin in 2016 after Prime Minister Narendra Modi had brought in the demonetisation of high value Rs 500 and Rs 1000 notes.
Nripendra Mishra, then Principal Secretary to PM Modi, wrote in a newspaper article (TOI, Sept 17, 2020 - Modi's birthday) -- "During the preparations for demonetisation in 2016, he (Modi) was not fully convinced of the idea to release new Rs 2,000 notes but accepted the suggestion of those who felt that speedy printing of the high denomination note would increase the availability of cash. He fully owned the decision and never blamed his advisers."
The RBI announcement on Friday, May 19, on the withdrawal of Rs 2,000 currency could have surprised some people.
But to most common people it did not matter much as the use of the high value notes has declined substantially.
It it not without good reason that Modi detractor and Congress leader P Chidambaram, also a former Finance Minister, now says the new move was -- "as expected".
"As expected, the government/RBI have withdrawn the Rs 2000 note and given time until September 30 to exchange the notes," he tweeted.
One politician in the opposition camp summed up the spirit of the common man on the issue much simpler by saying, "No problem; I don't have much of that denomination .. maybe not even a single note... so no issue".
The Rs 2000 currency note will remain legal tender after 30th September too and people can use them for any transactions till September end.
Simply put, the move to withdraw Rs 2,000 banknotes will have no immediate impact on citizens.
RBI expects that four month time is enough for people to exchange notes with the banks. Most of the Rs 2000 notes that are in circulation will return to banks within the given time frame of 30th September.
This is a routine exercise of RBI and people need not panic, sources said.
Sadly from the opposition camp, Delhi Chief Minister Arvind Kejriwal went 'personal' against Prime Minister Narendra Modi and linked the issue to score point irrespective of whether that makes any sense or not.
The fact of the matter is different; and many like 'educated' intellectuals and leaders like Kejriwal may not bother much to understand.
The RBI had noted that the Rs 2000 donomination note is no longer commonly used for transactions, as its circulation has come down from Rs 26.73 lakh crore in March 2018 to a modest Rs 3.62 lakh crore in March 2023.
On 19 May, the Reserve Bank of India announced that it is withdrawing the circulation of Rs 2000 currency notes. RBI informed that it had stopped printing the Rs 2000 notes in 2018-19, most of the notes have reached their end of life. Therefore the notes are being withdrawn in pursuance of the “Clean Note Policy”.
The RBI has said that people can exchange the Rs 2000 notes they may be having at banks from 23 May to 30 September. Only Rs 20,000 can be exchanged at a time, which means taking notes in other denominations by depositing Rs 2000 notes. There may be no limit on depositing the Rs 2000 notes in bank accounts.
In 2018, Rs 2000 notes formed 38 percent of the total cash chest and in 2023, it is only 10.8 percent.
The moot point is that the idea is to minimise the trouble caused to the common public.
Notably, in 2020 itself, reports started to appear in the media about the disappearing Rs 2000 notes and
ATMs were mostly dispensing only Rs 500 notes.
Clean Note Policy: Vajpayee era
The 'clean note policy' was adopted by the RBI in 1999 when Atal Bihari Vajpayee was the Prime
Minister and Bimal Jain was the RBI Governor. The move was to ensure the availability of good quality
banknotes to the public. The policy aimed at maintaining the integrity of the Indian currency by removing
damaged, counterfeit, or soiled notes from circulation.
Under the policy, the RBI regularly monitors the quality of currency notes in circulation and sets standards
for their acceptability.
It may be stated that during the UPA regime when Dr Manmohan Singh was the Prime Minister,
in December 2013, the RBI issued a statement as part of its clean note policy asking banks to
exchange soiled notes of even non-customers and issue only good quality clean notes to the public.
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