Now, the ‘star currency’ of the demonetisation event – the Rs 2000 note is about to be phased out-at least for the time being. This note with a pink colour will remain as a shock currency as it was the dominant form of popular transactions immediately after the demonetisation time. The currency was introduced as a preparatory measure to facilitate transactions in the context of the withdrawal of nearly 80% of currency circulation value.
How much important is its withdrawal?
The Rs 2000 notes amounts to nearly 13.8% of the total value of the currency as of March end 2022. The figure for 2023 is ye to be declared by the RBI. Still, its share is even smaller. Actually, the s 2000 note was not widely used in recent years and its frequency of circulation was steeply coming down with the RBI instructing banks to reduce its use. The general public was also sceptic about the note in the context of the demonetisation event. As of now, its value of circulation is abysmally low.
|Bank notes in circulation and their share in total value|
|Share in total value (%)|
|Currency Denomination||March 2022||March 2016|
|2 and 5||0.1||0.3|
|Source: RBI Annual Report 2022 and 2016|
The withdrawal of the Rs 2000 note is not the change that is going to happen in the near future. Definitely, India misses the services of Rs 1000 denomination. There is no question that after September 2023 or even before that, the RBI is going to issue new 1000 series notes. The current transaction values, and payment nature necessitates Rs 1000 series notes. At the time of demonetisation, Rs 1000 notes were having 38.6% share in total currency value; second to the most popular currency note – the Rs 500 notes.
Message from the exit of Rs 2000 notes
The withdrawal announcement of the currency note indicates how the mechanism learned lessons from difficulties created the demonetisation event. There is a long phase of four months that has been provided by the RBI to withdraw the Rs 2000 notes, which amounts to around 10% of the total value in circulation. Hence, there is no need for panic for any entity or even people. Most importantly, the RBI has reduced its use gradually over the last two years and the currency is just around 10% of the total value in circulation. Interestingly, the withdrawal of Rs 2000 notes comes at the time (Governor, RBI) of Sri Saktikanta Das who is believed to be the Godfather of demonetisation (when he acted as the Government secretary and member to the RBI Director Board in 2016).