The Mystery of the Vanishing Rs2,000 Notes!
When demonetisation was announced, everyone was thrilled to possess the brand-new Rs2,000 currency note. Some wise people, including TV news channels, even went up to claim that there was an embedded chip in the Rs2,000 note to detect its location and thus unearth black money hidden in deep space! However, over the past couple of years, all the hype around the Rs2,000 seems to have vanished like the note itself. Many people are still under the impression that like the Rs500 and Rs1,000 notes, the new Rs2,000 notes may also become invalid one fine evening. 
 
I mean can you remember when was the last time you had the Rs2,000 note in your possession? One year, two years or more? Near the end of 2019, I came to know from some friends in banking, especially those who have to regularly deal with the treasury branch of their bank, that there was an unofficial communication not to circulate Rs2,000 note. "We collect all Rs2,000 notes deposited by government departments and other customers. We are told not to make any payment or re-circulate these Rs2,000 notes," one of the bankers told me at that time.
 
I then filed an application under the Right to Information (RTI) Act with the Reserve Bank of India (RBI). With regard to the specified bank notes with a denomination of Rs2,000, including both clean and soiled notes, I had asked:
 
1. Copy of the notification or master direction or master circular issued by the Reserve Bank to currency chest to collect from all banks serviced by it and remit to the RBI currency notes of Rs2,000 denomination.
 
2. Copy of the file, along with file notings, based on which the above notification or master direction or master circular were issued by RBI. 
 
In response, the RBI told me that it has not issued any specific instruction. 
 
However, the Rs2,000 notes continue to become more and more invisible. First, they started disappearing from the automated teller machines (ATMs) and then from cash counters at bank branches. 
 
While the RBI says it has not issued any instructions to withdraw Rs2,000 currency notes from circulation, a written reply in the Lok Sabha shows both the government and RBI had not placed any order for printing these notes in the past two years. 
 
Anurag Thakur, minister of state for finance, told the house, "Printing of banknotes of a particular denomination is decided by the government in consultation with RBI to maintain the desired denomination mix for facilitating transactional demand of the public. During the years 2019-20 and 2020-21, no indent has been placed with the presses for printing of Rs2,000 denomination bank notes."
 
A Ganeshamurthi, a member of Parliament (MP), has asked questions on lower circulation of Rs2,000 currency notes among the people and why the notes are not even available in the banks and ATMs. He also asked if the government has stopped printing the Rs2,000 currency notes.
 
The Rs2,000 currency note was introduced after the Modi government demonetised old Rs500 and Rs1,000 notes in November 2016. This move drove out more than 85% of the currency notes by value in circulation at that time. Initially, the Rs2,000 note was circulated in large volumes to mitigate cash shortages that arose due to the ban on (old) Rs500 and Rs1,000 currency notes.
 
Responding to the question, Mr Thakur, the minister says, "As per the RBI, as against 3,362 million pieces (mpcs) of Rs2,000 denomination banknotes in circulation on 30 March 2018 constituting 3.27% and 37.26% of notes in circulation (NIC) in terms of volume and value, respectively; 2499 mpcs were in circulation on 26 February 2021 constituting 2.01% and 17.78% of NIC in terms of volume and value, respectively."
 
In other words, this means, over the past three years, the government removed as many as 863 million pieces or mpcs of Rs2,000 denomination banknotes from circulation. Further, it has not placed any order for printing these notes with the RBI or any currency note press.
 
In a January 2019 report, The Print, quoting highly placed government sources had mentioned that India has stopped printing Rs2,000 notes in a bid to slowly reduce their circulation. It says, "The cut in circulation does not mean the Rs 2,000 notes will become invalid. In all likelihood, the denomination will be gradually phased out."
 
"The decision to stop printing more Rs 2,000 notes was taken after Modi government became suspicious that the high-denomination currency note is being used for money laundering, tax evasion and hoarding," the report added.
 
The reply from the minister in the Lok Sabha partly answers why there is a smaller number of Rs2,000 notes in circulation. However, the government has not provided any reason for reducing the number of Rs2000 currency notes from circulation or not issuing any order for printing.
 
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    COMMENTS

    yerramr

    2 months ago

    They are all found in the seized notes in all the States currently having elections - not in just small bundles but only in gunny bags and piggy bags. Tamil Nadu is an example. However just last month, ATM dished out Rs.2000 notes when I drew the money. Therefore, to say that they disappeared after 2019 may not be universally valid.

    pgodbole

    2 months ago

    The author asks "when was the last time you had the Rs.2,000 note in your possession? One year, two years or more?" My answer is today, when I withdrew Rs.10,000 from an ATM and the machine dispenses 4 notes of Rs.2,000 and another 4 of Rs.500. And this has happened with me twice earlier this month. I am unable to recall on how many occasions it happened prior to that in recent past. But sure, I am getting Rs.2,000 notes from ATMs in Mumbai. So author's claim that Rs.2000 notes have disappeared is totally incorrect.

    Yes, govt. has not placed any fresh order for printing of Rs.2,000 notes in past 2 years, nor has it 'unofficially' advised banks to collect back and not circulate these notes. This may be a strategy, which we are not aware of.

    maheshsbhatt

    2 months ago

    After failed marketed DeMon as per RBI our country talks center around Sauchalaya Swatchta but not GDP Economic growths Job creations last 6 years Common man has lost business times due to DeMon/GST now Covid lockdown 1 year on 23/3/21 & still lockdowns in air? 30% of MSME is shutting down & Chai Tapri's have gone down from Rs7 to Rs5 /cutting & many shut.PM/FM who should look into are singing own songs National Disaster Management act has a compensation portion which Kapil Sibal raised & now everyone silent? Enjoy Shah Namo 4 state elections democrazies? Like 91 crisis we are into different crisis but No Channel talks all farts No shits?Oh Shit?Mahesh Bhatt

    cjninan

    2 months ago

    In my way, this is the right way to remove a currency note instead of demonetizing and putting scare among public. I think the Government got wiser after the 500 demonetizing. I wish they had done the same way. Who wants 2,000 in any way, all the public needs is a portable currency. Yes we might need 2,000 if inflation continues and value of existing notes fall in value.

    prime

    2 months ago

    Yogeshji, you have unearthed a bigger issue - that the government has increased the value of circulating currency by 55% in three years!

    In 2018, 34mpc of Rs.2000 notes constituted 37% of the total value, so the total value of notes in circulation was about Rs.18 trillion.

    In 2021, 25mpc of Rs.2000 notes constitute 18% of the total value, so total value of notes in circulations is about Rs.28 trillion!

    The government has effectively printed Rs.10 trillion (approx $130 billion) cash currency in three years, a 55% increase.

    Why has the government printed so much currency when they claim to be emphasizing on digital currency and transfers? Where is this cash being used?

    REPLY

    Kamal Garg

    In Reply to prime 2 months ago

    RBI has many a times admitted that there is an increase in currency in circulation in the last 3 years despite digitalization of the payment processes/business transactions and the economy, at large.

    prime

    In Reply to Kamal Garg 2 months ago

    Currency in circulation has grown in 2020 despite a drop in GDP. This is the first time this has happened.

    See https://trak.in/tags/business/2021/01/08/currency-beats-digital-india-20-more-currency-in-circulation-despite-gdps-negative-growth/

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