Don't jump, Rs 2000 currency notes slowly being phased out

As per RBI's latest annual report, the big note was not printed at all during 2019-20

Mumbai: It's not quite demonetisation but the Reserve Bank of India looks like it is phasing out the Rs 2000 currency note if cues available in its annual report 2019-20, released on Tuesday, are any indication.

The annual report said the Rs 2000 denomination note, introduced during demonetisation in 2016, was not printed at all during 2019-2020.

The number of Rs 2,000 currency notes in circulation has come down from 33,632 lakh pieces at the end of March 2018 to 27,398 lakh pieces at end of March 2020.

The Rs 2,000 notes constituted 2.4 per cent of the total volume of notes at end-March 2020, down from 3.3 per cent at end-March 2018.

In value terms also, the share has came down to 22.6 per cent at end-March 2020 from 37.3 per cent at the end-March 2018. It was 50 per cent in 2017, as the major focus that year was on remonetising the economy.

On the other hand, the circulation of Rs 500 and Rs 200 notes has gone up substantially, both in terms of volume and value over the three years beginning 2018.

A senior banker told Deccan Chronicle, “Very clearly, without demonetisation, the RBI maybe phasing out Rs 2000 currency notes. We are not getting any new
supply of Rs 2000 notes.”

A former banker said, “There may be some people hoarding Rs 2000 currency notes but they may be few. Banks are not reissuing Rs 2000 notes and maybe banks have been told by RBI not to reissue Rs 2000 notes. Also it's easy to calibrate ATMs with lower currency notes. Rs 500 notes are more easy to use and convertible. The world over, the 2000 denomination currency is rare.”

Interestingly, the number of banknotes in circulation has grown by 7 per cent to 116 billion pieces as of March 2020.

As for counterfeit notes, the central bank said a total of 2,96,695 pieces were detected during the previous financial year. The number of counterfeit notes of Rs 2,000 detected was 17,020 pieces during the last fiscal, down from 21,847 in 2018-19.

The RBI said the demand for currency started to increase in the wake of heightened uncertainty caused by COVID-19 pandemic. The Reserve Bank took a series of measures in order to meet the enhanced demand. In addition, note printing presses, paper mills and banks were also directed to put in place a business continuity plan/contingency plan to avoid any disruption in continuous supply of currency.”