Published: Sat, January 05, 2019
Money | By Ethel Goodwin

What has led to 13% fall in circulation of ₹2000 currency notes?

What has led to 13% fall in circulation of ₹2000 currency notes?

Soon after the sudden decision to ban old Rs 500/1,000 currency notes by the government, the central bank had come out with the Rs 2,000 currency note along with a new look Rs 500 note as part of its massive remonetisation exercise.

The news, as reported by The Print, says that the Reserve Bank of India has stopped printing the note, although that doesn't mean that the Rs 2000 note will not be valid, rather the circulation will get lower and eventually, will be phased out.

While Garg cleared the air around printing of Rs 2,000 notes, there have been several reports in the past which indicate that Rs 2,000 notes, released after demonetisation, is not necessary anymore.

The Rs 2,000 note, along with the new Rs 500 note, was introduced in November 2016 to replace the demonetised Rs 1,000 and Rs 500 notes and to deal with the acute currency shortage.

The government, in August 2018, had said that there was no proposal to withdraw Rs 2,000 denomination notes. The government suspected cash hoarding ahead of state elections, as well as stocking of money by people in the aftermath of the PNB-Nirav Modi bank fraud. However, the cut in circulation doesn't translate into the note being deemed invalid. Of the total currency in circulation amounting to Rs 18,037 billion at end-March 2018, Rs 2,000 notes accounted for 37.3 per cent, down from 50.2 per cent at end-March 2017.

Soon after the ₹2,000 note-the highest denomination in circulation currently-was introduced in November 2016, TV channel ZEE informed viewers that the banknotes had "state of art nano Global Positioning System chips".

So, two years after its introduction, the currency note which aimed at ending circulation of fake currency and black money, appears headed to a slow extinction.

To compensate, the printing of Rs 500 notes has been increased.

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