Last Updated:

Rs 2,000 Note Phased Out: Here Are The Main Reasons

Here are some key reasons for the withdrawal of the high value currency.

India Business
| Written By
Sharmila Bhowmick

Image Credit: Republic

A demand for phasing out the Rs 2000 currency note has been a standing before the Government since year 2022. 
BJP Rajya Sabha MP Sushil Kumar Modi had made a request before the government in Parliament to withdraw the note in a phased manner. The pink note with a valuation of Rs 2000 was introduced in India following the demonetisation move by the government in November 2016 when the government withdrew Rs 100 and Rs 500 notes from circulation. Here are some of the key reasons why the Rs 2000 note has been finally withdrawn from circulation in India:

To curb illegal transactions

Usage of the high value note for illegal transactions has been one of the key reasons for it being phased out. 
Speculations have been made earlier about the notes usage in 'terror funding, drug trafficking and hoarding black money'. A withdrawal of the note was asked to be done in a phased manner as the currency is of very high value. The Finance Ministry had earlier said: “Printing of banknotes of a particular denomination is decided by Government of India in consultation with Reserve Bank of India (RBI) to maintain desired denomination mix for facilitating transactional demand of public. No fresh indent has been placed with the presses for printing of Rs 2000 denomination notes from 2018-19 onwards. Further, banknotes go out of circulation as they get soiled/mutilated.” 

Phasing out Rs 2000 bank note

The Central Government has announced in December that no fresh Rs 2000 denomination has been printed since 2018-19. The share of Rs 2000 denomination banknotes from total Notes in Circulation (NIC) has dropped from 22.65% in 2020 to 13.8% by March 2022. The share of Rs 500 notes has increased to 73.3% from 29.7% between 2020 and 2022. 

How much is the Rs 2000 note in circulation?

The Reserve Bank of India has said that the banknotes will be withdrawn because only 10.8 % of the notes are in circulation as on March 31, 2023. The RBI has however said that the note will continue to be legal tender.

No cause for panic

If you have Rs 2000 notes with yourself, you have until September 30, to get them exchanged at your nearest bank.


First Published: