The Reserve Bank of India ordered the withdrawal of Rs 2,000 notes on May 19, giving people until the end of September to exchange them or deposit them in banks. While the vast majority of the 3.56 trillion rupees has been deposited since then, 7% of the notes were still in circulation as of September 1.
The pink-hued Rs 2,000 note was introduced in November 2016 to re-monetize the economy, following Prime Minister Narendra Modi's shock decision to remove Rs 1,000 and Rs 500 notes as legal tender overnight, as part of an anti-corruption push. It quickly became a favorite storage of value and banknotes of choice for large cash transactions.
In its withdrawal notice, the RBI said the notes had served their purpose and were not in common use. It also referred to a "clean note policy" to replace soiled notes within four to five years.
The May announcement led to a mini consumption boost for India’s economy, with local media reporting that packed jewelry stores were selling gold at higher prices.
The bonds will remain legal tender even after September 30, but will not be accepted for transaction purposes and can only be exchanged with the Reserve Bank of India (RBI). The holder will have to explain why the general deadline could not be met.
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