so big decision by The Reserve Bank of India to withdraw the 2000 rupee note from circulation I remember the 2000 rupee note was introduced after demonetization on the 8th of November 2016 when 500 and 1000 rupee notes were demonetized it's been a short-lived Journey for the 2000 rupee note from 2016 up until 2023.
Now what does this mean if you have 2000 rupee notes in your home or in your wallet you can exchange it or deposit it in your account uh in a bank up until the 30th of September so for the next four months or so you have time to either exchange that for a lower denomination currencies or you can deposit it in your account in a bank so for the next four months it will continue to be legal tender but thereafter you cannot use it for any business transactions to buy stuff at a shop at a petrol stations so on and so forth you cannot use it post the 30th of September 2022 you can still exchange it or or deposited in RBI just like you do with soiled nodes or discontinued nodes so you can go to the RBI to exchange that note even post the 30th of September 2022.
now it's interesting to look at the Journey of the 2000 rupee note itself when it came into uh being in November of 2016 the idea the rationale of introducing the 2000 rupee note was because 500 and 1000 had been demonetized and that was more than 80 85 percent of the currency in circulation at that time to ease the burden on people's woes to ease the burden of you know long queues outside ATMs or Bank branches are people who are Keen to exchange their uh 500 and 1000 rupee notes they needed a high value denomination currency and hence the 2000 rupee note was introduced the RBI Governor has from time to time said that the 2000 rupee note seems to have outlived the purpose for which it was introduced and that purpose was was to mitigate some of the pain while exchanging the old 500 and 1000 rupee notes so one it had outlived its value and its purpose and two the RBI Governor has expressed concerns in the past as well that because it's a high denomination currency people are using the 2000 rupee node to hoard cash and this is oftentimes unaccounted cash cash that does not come back into the formal banking system now as per the RBI report on the 31st of March 2023 the value of 2000 rupee notes that were out in circulation was a little over 3.6 lakh crores that represents a just about 10 percent of the total value of currency in circulation when it was introduced in 2016-17 after demonetization the total value of 2000 rupee notes that was in circulation at that time was over 50 so by value terms it was more than half at that time at the time of introduction at the time of its phasing out now seven years later uh the value of the 2000 rupee note that's in circulation is only about 10 and it is not an immediate overnight demonetization like we saw in 2016 you have another four months or so to go and either exchange these notes or deposit this in your bank account having said that the opposition parties are already calling this a second demonetization disaster it will be interesting to see what the response will be outside Banks and ATMs starting Monday whether there will be a queue of people to exchange these notes or deposit it uh in their accounts or will it be far more controlled at least certainly compared to what we saw in 2016.
also one other concern is the differential even at the time of demonetization the entire gamut of 500 and 1000 rupee notes the value that was in circulation did not come back there was a significant shortfall uh in the amount of money that was and in circulation and what actually formally came back into the banking system that same thing could happen here as well you may not get the entire 3.6 lakh crores of 2000 rupee notes by value that are in circulation in the market what comes back into the forward banking system could be substantially lower and that shortfall whatever that shortfall might be will be the unaccounted cash that's used for real estate and other unaccountered transactions
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