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."
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.