No instructions to banks to phase out Rs 2,000 notes, says Finance Minister Nirmala Sitharaman

Banks have started dispensing more of Rs 500 notes than Rs 2,000 denomination notes, a move seen as gradual phasing out of the high denomination currency note

Press Trust of India February 27, 2020 14:31:00 IST
No instructions to banks to phase out Rs 2,000 notes, says Finance Minister Nirmala Sitharaman
  • Banks have started dispensing more of Rs 500 notes than Rs 2,000 denomination notes, a move seen as gradual phasing out of the high denomination currency note

  • State-owned Indian Bank has already announced that it has decided to stop using Rs 2,000 notes in their ATMs

  • The Reserve Bank of India (RBI) in an RTI response last year had said that the central bank had stopped printing Rs 2,000 denomination currency notes

New Delhi: Banks have started dispensing more of Rs 500 notes than Rs 2,000 denomination notes, a move seen as gradual phasing out of the high denomination currency note.

The Reserve Bank of India (RBI) in an RTI response last year had said that the central bank had stopped printing Rs 2,000 denomination currency notes.

Although there has been no dictate from the Finance Ministry, banks on their own have decided to fill their ATMs with smaller denomination notes for the convenience of customers, sources said.

Some banks have already started recaliberation of their ATMs and other banks will also follow the suit, sources said.

State-owned Indian Bank has already announced that it has decided to stop using Rs 2,000 notes in their ATMs.

No instructions to banks to phase out Rs 2000 notes says Finance Minister Nirmala Sitharaman

Representational image. Reuters

When asked if the Finance Ministry has asked banks not to push Rs 2,000 notes through ATMs, Union minister Nirmala Sitharaman said the ministry has not issued any instruction to banks in this regard.

"As far as I know, no such instruction has been given," the finance minister said on the sidelines of an event here.

Getting change for a Rs 2,000 note has become an issue and due to that some banks have stopped using Rs 2,000 notes in their ATMs, sources said.

According to the RBI's RTI reply, 3,542.991 million notes of Rs 2,000 denomination were printed during 2016-17.

However, 2017-18 saw a substantial reduction in printing and only 111.507 million notes were produced, which further reduced to 46.690 million notes in 2018-19.

This indicates that while these high denomination notes would continue to be a legal tender but will be phased out eventually.

The move is seen as an attempt to prevent hoarding of the high-value currency and thus, curb black money. The government had in November 2016 demonetised Rs 1,000 and Rs 500 denominations notes.

Replying to a question in Parliament, Minister of State for Finance Anurag Singh Thakur in December said there is no proposal to withdraw Rs 2,000 denomination notes.

"This is the real worry (about demonetisation) which has surfaced now. I think that you should not worry about it," Thakur told the Rajya Sabha while replying to a question whether the government was planning to withdraw Rs 2,000 notes in future.

According to the reply, notes in circulation (NIC) as on 4 November, 2016, were Rs 17,74,187 crore which have now increased to Rs 22,35,648 crore as on 2 December, 2019.

The NIC had grown at an average growth rate of 14.51 percent year on year wise since October 2014 till October 2016.

At this rate, NIC would have increased to Rs 25,40,253 crore as on 2 December, 2019.

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