Effects of decision to withdraw Rs 2000 notes, RBI reveals big information

The effect of withdrawal of Rs 2,000 bank note of Reserve Bank of India (RBI) from circulation is visible. According to the data, the growth of currency in circulation has declined to 3.7 percent in the week ending February 9 from 8.2 percent a year ago.

The currency in circulation (CIC) refers to the notes and coins in circulation. Whereas the currency available with the public refers to the existing notes and coins in circulation after deducting the cash deposited with the banks.

According to RBI, deposits with commercial banks have increased by double digits in January. The reason for this is also the removal of Rs 2,000 notes (Rs 2000 Notes Withdrawn from Circulation). According to the central bank data, the growth of the reserve currency (RM) declined to 5.8 percent on February 9, 2024, from 11.2 percent a year ago. Apart from CIC, RM includes deposits of banks with RBI and other deposits with the central bank.

According to RBI, the growth of CIC, the largest segment of RM, slowed to 3.7 percent from 8.2 percent a year ago. The reason for this is clearly the withdrawal of Rs 2000 bank notes.

After the announcement of demonetization in November 2016, Rs 2,000 currency note was introduced. The central bank had announced to withdraw Rs 2,000 notes from circulation on May 19, 2023.

As of January 31, about 97.5 per cent of the Rs 2,000 notes had returned to the banking system, and only Rs 8,897 crore worth of such notes are still with the public. The total value of Rs 2,000 bank notes in circulation at the close of business on May 19, 2023 was Rs 3.56 lakh crore.

In such a situation, people and units holding Rs 2,000 notes (Impact of Rs 2,000 notes withdrawal) were initially asked to exchange them or deposit them in bank accounts (2000 Rupee Note Exchange and Deposit) by September 30, 2023. Later this deadline was extended till October 7, 2023. From October 8, 2023, people have been given the option to exchange notes at 19 RBI offices or deposit the same amount in their bank accounts.