Rs 2,000 Notes Won't Be In Use After Sept. 30: What Happens Next?

The countdown to deposit or exchange the withdrawn Rs 2,000 currency notes has begun. With Sept. 30 as the official deadline, the public has time until this weekend to let go of the withdrawn notes in their possession.

The Reserve Bank of India announced the withdrawal of Rs 2,000 currency notes from circulation on May 19. It clarified that the note will, however, continue to maintain its legal tender status.

The withdrawal was announced in accordance with the RBI's clean note policy, which ensures the availability of good-quality banknotes to the public.

As per data from banks, the total value of Rs 2,000 banknotes received from circulation was Rs 3.32 lakh crore up to Aug. 31, the RBI said in a statement on Sept. 1. This means that 93% of the notes in circulation have been returned to the banks, it added.

Due to this, there may not have been a lot of rush at the banks in the last few days, according to Sivaraman K, general manager and head of the banking operations group at South Indian Bank.

With just 7% left in the system, analysts also believe that the collections will be strong by Sept. 30.

"We may see the final number come to 98–99% in terms of the return of withdrawn currency notes," according to Asutosh Mishra, head of research for institutional equity at Ashika Stock Broking.

With most notes expected to come back to the banks by the deadline, there is not much impact seen on the liquidity front either.

"Liquidity is a little tighter than we would've liked it to be, but it is not unduly alarming. Most of it is back in the system, and with the festive season coming up, I don't see any major impact on it," said Vinit Bolinjkar, head of research at Venture Securities Ltd.

Relaying similar sentiments, Amit Khurana, head of equity at Dolat Capital, said that the RBI took care of liquidity conditions by deploying the incremental cash reserve ratio. So, there will be no impact on liquidity in any way, he added.

What Happens If You Miss Sept. 30 Deadline?

BQ Prime previously reported that the public may have to go to the regional offices of the RBI to exchange or return Rs 2,000 if they miss the deadline.

"The regulator can allot some one or two centres where you may go and deposit the Rs 2,000 notes in case you missed the bus. That could be a possibility, but I don't think the RBI will extend the deadline as most of the notes have been returned," Bolinjkar said.

However, a deadline extension, if allowed, may only be restricted to some people, like non-resident Indians, and not to everyone, Sivaraman K. added.

The regulator will clear the air on the deadline closer to Sept. 30.