MUMBAI: India will withdraw its highest denomination currency note from circulation, the central bank said on Friday . The 2,000-rupee note, introduced into circulation in 2016, will remain legal tender but citizens have been asked to deposit or exchange these notes by Sep 30, 2023.
This time, however, the move is expected to be less disruptive as a lower value of notes is being withdrawn over a longer period of time, according to analysts and economists.When 2,000-rupee notes were introduced in 2016 they were intended to replenish the Indian economy's currency in circulation quickly after demonetisation.
"This denomination is not commonly used for transactions," the Reserve Bank of India said in its communication while explaining the decision to withdraw these notes.While the government and the central bank did not specify the reason for the timing of the move, analysts point out that it comes ahead of state and general elections in the country when cash usage typically spikes.
"This withdrawal will not create any big disruption, as the notes of smaller quantity are available in sufficient quantity," said Nitsure."Also in the past six to seven years, the scope of digital transactions and e-commerce has expanded significantly."