Your Rs 2,000 Banknotes Will Be Legal Tender, Even After Sept. 30

Indian two thousand rupee banknotes are arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

If you are receiving scaremongering messages that there is another demonetisation upon us, hold back on forwarding that. It is a lie.

The Reserve Bank of India, on Friday, announced that it will be withdrawing Rs 2,000 currency notes from circulation. This was done because the RBI noted that most of the Rs 2,000 notes currently in circulation were not being commonly used. Since these notes were printed in 2017—because the RBI stopped printing new Rs 2,000 notes in FY19—they were already four or five years old.

The regulator has said that it is now actively pulling these notes from circulation and has advised members of the public to either deposit their Rs 2,000 notes into their bank accounts or exchange them for other currency denominations. The RBI has also encouraged the public to submit these notes into banks by Sept. 30, 2023. This gives you 134 days from the announcement to deposit or exchange these notes at your banks.

'But what after that?' you may be muttering under your breath. The answer to that question is the RBI's other statement in its press release.

"The banknotes in Rs 2,000 denomination will continue to be legal tender," the regulator said.

Demonetisation refers to a situation where a currency note is divorced from the value it denotes. It also comes with certain legal issues, if you continue to hold large value of the demonetised notes after a specified date.

Most importantly, the RBI is not empowered to demonetise any currency notes. Only the government can do that.

In an interview with CNBC-TV18, Finance Secretary TV Somanathan said that he does not foresee the move by the RBI to have any effect on the economy. The Rs 2,000 currency notes continues to be legal tender and there are several months to exchange the notes.

So what do you do if you have Rs 2,000 currency notes after Sept. 30? For that, you need to look at what the RBI did when it previously withdrew some currency notes from circulation.

In January 2014, the RBI withdrew all banknotes issued before 2005 after March 31, 2014. As is the current case, the RBI gave people time till July 1, 2014 to exchange or deposit these notes at bank branches.

After that deadline, the regulator informed the public that to exchange more than 10 pieces of Rs 500 and Rs 1,000 notes, people had to furnish proof of identity and residence to the bank branch in which they wanted to exchange the notes.