India’s highest denomination banknote, the 2,000-rupee note introduced in 2016 for economic remonetization, is set to be withdrawn by the Reserve Bank of India. This action was ordered on May 19, allowing individuals until the end of September to exchange or deposit them with banks. As of September 1, about 7% of the 3.56 trillion rupees in circulation still remain unbanked.
The distinctive pink-hued note quickly gained popularity as a storage of value and the preferred choice for substantial cash transactions following Prime Minister Narendra Modi’s sudden move to invalidate 1,000 and 500 rupee notes in an anti-corruption initiative.
The RBI’s withdrawal notice stated that these notes have served their purpose and are no longer commonly used. It also cited its “clean note policy” to replace worn-out notes within four to five years. The announcement in May led to a temporary uptick in consumption for India’s economy, with reports of bustling jewelry shops selling gold at a premium.
While these notes will remain legal tender beyond September 30, they will no longer be accepted for regular transactions and can only be exchanged directly with the RBI. Holders seeking exceptions to the general deadline will need to provide a valid explanation.