Here’s Why RBI Recalled Rs 2000 Notes

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Here’s Why RBI Recalled Rs 2000 Notes

| Updated: May 21, 2023 12:46

The Reserve Bank of India (RBI) on Friday announced that the Rs 2000 denomination notes will be recalled and gave citizens time till September 30 to deposit these in banks. Dubbed ‘Demonetisation Part 2’, the move surprised the nation, even as the opposition Congress and the Aam Aadmi Party attacked Prime Minister Narendra Modi for the “illogical move”. While Modi himself was in Japan with the world leaders, there is plenty of speculation back home as to why the Rs 2000 notes are withdrawn.

Now, Nripendra Mishra, a former chief secretary to Prime Minister Modi, has shed some light on the decision. He said that Rs 2000 denomination notes were established as a “temporary remedy” and that Modi “never wanted these notes to be in use”.

“The PM had always maintained that these notes were inappropriate for daily use and should never have been allowed to reach the market. He thought that the circulation of black money would rise and that tax evasion would be encouraged by these notes. He always desired to use the small-denomination currency.” Ironically, as per the RBI guidelines, these notes will continue to be recognised as legal money even after September 30. 

At the time of demonetisation, 80% of the country’s currency was in the Rs 500 and Rs 1000 denomination bills. When both of these currencies were taken out of circulation in this case, a higher denomination note was created as compensation. The value of the Rs 2000 notes in circulation in the country is Rs 3.62 lakh crore, according to data available until March 31 of this year. Most of these notes were issued in 2018 when Rs 6.73 lakh crore were exchanged.

Read Also: Notebandhi II: RBI Cancels Rs 2000 Notes, Gives Time Till Sept To Public

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