Withdrawal of 2,000 rupee notes: bank test time ahead

With around 155,000 bank branches in the country, each branch averaged 11,677 Rs 2000 banknotes, or 116 per day from 23 May to 30 September 2023. You need to process banknotes. The 2,000 rupee note issuance may not appear to be as massive as the November-December 2016 denomination exercise, when branches across the country witnessed chaotic scenes in the exchange of 500 rupee and 1,000 rupee notes. But banks are expected to deploy personnel to accommodate the exercise.

“Exchanges of notes are costly. Banks will need to spend a lot of money to reconfigure ATMs and cash recyclers accordingly,” said a nationalized bank official. According to RBI data, there are 257,000 ATMs nationwide.

The RBI previously said that among banknotes, “100 rupee notes are the most preferred” and “2,000 rupee notes are the least preferred”.

The “Consumer Banknote Survey,” published in the RBI Annual Report 2021-2022, included 18- to 79-year-olds in rural, semi-urban, urban and metropolitan areas by gender. About 11,000 respondents participated, including 60:40 for men and women. “The survey results revealed that among banknotes, 100 rupees is the most preferred banknote and 2000 rupees is the least preferred banknote. was least favored,” the central bank said.

On Friday, the central bank said the total value of these notes in circulation had risen from its peak of 6.73 billion rupees (37.3% of notes in circulation) on March 31, 2018 to 10.8% of notes in circulation36. Decreased to 120 million rupees. About 89 percent of the 2,000 rupee banknotes were issued before March 2017 and have an estimated lifespan of four to five years.

According to RBI’s latest annual report for 2021-22, the combined share of 500 rupee and 2,000 rupee notes in denomination accounted for 87.1% of total banknotes in circulation as of 31 March 2022. occupied. In terms of volume, 500 rupee banknotes account for the highest share at 34.9%, followed by 10 rupee banknotes in circulation, accounting for 21.3% of the total banknotes in circulation as of 31 March 2022. .

Bank deposits could rise slightly, although banks would face pressure to facilitate the exchange of 2,000 rupee notes.

“We expect bank deposit growth to improve slightly in the near term, as we saw during de-monetization. It could also lead to lower interest rates,” said Karthik Srinivasan, senior vice president and head of the Financial Sector Ratings Group at ICRA Ltd.

After withdrawing the legal tender status of all 500 rupee and 1,000 rupee notes in circulation at the time, the RBI decided to demonetize in November 2016, primarily with the aim of quickly meeting the currency demand of the economy. Occasionally introduced 2,000 rupee banknotes. The main objectives of the 2016 exercise were to reduce the black money component, reduce cash transactions and digitize the financial system.

However, more than six years after the government announced its demise on November 8, 2016, the currency with the public has now reached new highs. As cash remains the preferred payment method, the currency in circulation for the two weeks ending 5 May 2023 is Rs 33.66 crore, an increase of 87 per cent or Rs 15.69 crore from Rs 17.97 crore on 4th November 2016 bottom. .

The nation’s cash was recorded at 9.11 billion rupees on November 25, 2016, two weeks after the 500 and 1,000 rupee notes were withdrawn from the system and before the introduction of the new 500 and 2,000 rupee notes. jumped 269 percent from

Former Finance Minister P Chidambaram said the 2,000 rupee note was “a stopgap measure to cover up the stupid decision” to do away with the popular and widely exchanged 500 and 1,000 rupee notes. .

“After a few weeks of non-monetization, the Government/RBI was forced to reintroduce the 500 rupee note. Full circle,” he said in a tweet.

© Indian Express (P) Ltd

Date first published: May 21, 2023, 04:04 IST

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