RBI To Withdraw Rs 2,000 Notes: Why It Will Not Have Any Impact on Indian Economy? 5 Things To Know

Former NITI Aayog Vice Chairman Arvind Panagariya said that the RBI’s decision will not have any ‘perceptible effect’ on the economy as any such notes returned will be replaced by either equivalent cash in lower denomination notes or a deposit.

Mumbai: In a significant move, the Reserve Bank of India decided to withdraw Rs 2000 denomination banknotes from circulation and said that the currency notes will continue to remain as legal tender. The central bank has advised other public lenders to stop issuing Rs 2000 denomination banknotes with immediate effect. However, the RBI said that citizens will continue to be able to deposit Rs 2000 banknotes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch up to September 30, 2023.

Will it have any impact on Indian economy?

Reacting to the latest development, former NITI Aayog Vice Chairman Arvind Panagariya said that the RBI’s decision will not have any ‘perceptible effect’ on the economy as any such notes returned will be replaced by either equivalent cash in lower denomination notes or a deposit.

Panagariya further stated the likely objective behind this move is to make the movement of illicit money more difficult.

According to Panagariya Rs 2,000 currency notes represent only 10.8 per cent of the cash currently in the hands of the public and probably most of it is being used for illicit transactions.

Will Public Face Inconvenience?

Panagariya said many citizens probably have no Rs 2,000 notes since few transactions take place in those notes.

He said for those who do, inconvenience will not be beyond an extra trip to the bank and even that can be avoided by exchanging Rs 2,000 notes when visiting the bank for some other transaction.

Is There Any Need For Rs 1,000 Currency Notes?

Panagariya further said as of now, he does not see a need to issue Rs 1,000 notes as citizens have become used to transact in notes of Rs 500 or lower denomination.”

Will Rs 2000 Banknotes Be Used For Normal Transactions?

Yes. The general bank customers can continue to use Rs 2000 banknotes for their regular transactions and also receive them in payment. However, they should deposit and/or exchange these banknotes on or before September 30, 2023.

What To Do With Rs 2000 Banknotes Held By Public?

The public can approach bank branches for deposit and/or exchange of Rs 2000 banknotes held by them as this facility will be available at all banks until September 30, 2023. Moreover, this facility will be available at the 19 Regional Offices (ROs) of RBI having Issue Departments1 until September 30, 2023.