<div style="page-break-before: always; page-break-after: always;"><p>A person can exchange Rs 2,000 notes worth Rs 20,000 at a time at any bank, the central bank elaborated. The long window of roughly four months that the RBI gave to exchange or deposit these notes is starkly different from the previous avatar of demonetisation where Rs 500 and Rs 1,000 notes were withdrawn overnight. However, the confusion around the announcement and the ensuing clarifications were grim reminders of the 2016 note ban. The withdrawal of the 2,000 rupee note is ostensibly part of the RBI&rsquo;s &ldquo;clean note policy&rdquo;, but its timing, ahead of assembly elections this year in several states, has raised questions about its real intent. The RBI, on its part, has explained that the Rs 2,000 note was introduced in November 2016 only as a replacement to bridge the liquidity gap caused by the sudden withdrawal of Rs 500 and Rs 1,000 notes. Most of the Rs 2,000 denominated notes (89 per cent) were issued before March 2017, which meant that they were at the end of their estimated lifespan of four to five years, the RBI said. Meanwhile, the total value of these notes in circulation declined from Rs 6.73 lakh crore at its peak on March 31, 2018 to Rs 3.62 lakh crore as on March 31 this year. Only 10 per cent of the total Rs 2,000 denominated notes are currently in circulation, compared to 50 per cent in the weeks soon after demonetisation, which means the general public is not using them as much as they were in the past. At 2.14 billion, the number of Rs 2,000 notes in circulation was just 1.6 per cent of the total number of notes in circulation at the end of FY22. The RBI stopped printing the Rs 2,000 note as early as 2018-19 and has now asked banks not to dispense them through ATMs. At the same time, the central bank has no plans to introduce Rs 1,000 notes, RBI governor Shaktikanta Das clarified. He said the decision to withdraw the Rs 2,000 note will have a &ldquo;very marginal impact&rdquo; on the economy.</p><p><strong>T</strong>hat didn&rsquo;t stop the general public from panicking when the announcement came. It took no time for the users to lose trust in the tender, which meant people were unwilling to accept them in shops and other establishments. So much so that Das had to step in to clarify that the notes remain legal tender for now. Whether they will continue to do so beyond September 30 is something Das remained non-committal on. &ldquo;We will see how many notes come back and, as we approach September 30, we will decide at that stage,&rdquo; he said.</p><div style="page-break-before: always; page-break-after: always;"><p>The All India Petroleum Dealers Association has asked the RBI &ldquo;to give guidelines to banks for providing enough small denomination notes, especially to petrol pumps...so that we can smoothly serve our customers&rdquo;. Pumps are seeing several transactions being made in Rs 2,000 notes ever since the announcement by the RBI. At the official Apple retail store in the national capital&mdash;only the second in the country so far&mdash;customers could be seen buying in bulk the latest and most expensive Apple products such as Apple MacBook Pro laptops (that cost upwards of Rs 2 lakh) and the iPhone 14 Pro (costing another lakh), paying for them in Rs 2,000 notes. Several  forex dealers have reportedly become cautious in accepting Rs 2,000 notes, as banks, according to them, are seeking the source of the notes being deposited. Meanwhile, the State Bank of India, the country&rsquo;s largest bank, has said it will allow customers to exchange the Rs 2,000 notes without a requisition slip for amounts up to Rs 20,000. This will help protect the identity of those exchanging the notes. However, the RBI has asked banks to maintain separate daily records of the value of notes submitted for exchange and the number of notes that come in.</p><div style="page-break-before: always; page-break-after: always;"><p>It is still not clear what prompted the central bank&rsquo;s move to withdraw Rs 2,000 notes from circulation at this stage, causing another disruption. The introduction of Rs 2,000 denominated  notes following demonetisation had raised doubts on their large-scale usage among the public. &quot;When Rs 2,000 notes were brought in, it appeared to be an anomaly,&quot; says Madan Sabnavis, chief economist with the Bank of Baroda. Moreover, the whole idea of demonetisation was purportedly to weed out black money, &quot;because it was believed that black money resided in Rs 500 and Rs 1,000 notes&quot;. That does not seem to be the case this time around. &quot;The RBI had stopped printing it after 2018-19, which means that in the normal course too, Rs 2,000 notes were disappearing,&quot; says Sabnavis. People who used the Rs 2,000 note in large numbers used it for specific purposes such as buying land, jewellery or for marriages. In such cases, the Rs 2,000 notes came in handy for large-volume transactions, although sometimes the money being used was unaccounted-for. It is unlikely, however, that the withdrawal of Rs 2,000 notes will leave these needs unmet; people are likely to use currency of other denominations for their purposes.</p><p>Several experts believe that frequent disruptions in the denominational hierarchy of currencies could affect liquidity and the currency&#39;s role as a stable medium for the circulation of goods and services. What the RBI needs to do immediately, though, is to make it clear what the status of the Rs 2,000 note will be post September 30, so that the public knows what to expect and act accordingly. Making it easier to exchange and deposit these notes with banks by raising the present limits will go a long way in easing the entire process of withdrawing notes of Rs 2,000 denomination.</p>

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