Money matters: It is demonetisation of different type
Indian households are once again in panic.
Indian households are once again in panic. The reason is the Rs 2,000 currency note, which always remained suspect.
Not many can still put behind those agonizing moments they had standing in long queues outside banks to get their legal tenders of 1000 and 500 changed in November 2016. That was the first devastating demonetization blow that had left crores of households “crippled”.
The saving grace this time has been that the RBI has made public in advance its intention to pull back Rs 2000 currency notes from public circulation.
How successful or effective was the November 2016 demonetization remains a subject of animated discussion even after more than six years.
The Reserve Bank of India has now notified – today May 19 – to withdraw Rs 2000 currency notes from circulation. However, the banknotes in ₹2,000 denomination will continue to be legal tender for the next four and a half months.
Members of the Indian Diaspora who have in their savings or otherwise personal possession Rs 2000 currency notes need to act fast as the RBI deadline of September 30 may not be extended this time.
Interestingly, long before today’s announcement, many traders and even banks, often exhibited reluctance to accept Rs 2000 currency notes as fears of it being withdrawn suddenly lurked high.
Unlike the November 2016 shock demonetisation when old ₹500 and ₹1,000 notes were invalidated overnight, the ₹2,000 notes will continue to be a legal tender till September 30.
The RBI added that members of the public may deposit ₹2000 banknotes into their bank accounts. They can also exchange them into banknotes of other denominations at any bank branch. Deposit into bank accounts can be made in the usual manner, that is, without restrictions and subject to extant instructions and other applicable statutory provisions.
Exchange facility for the ₹2,000 notes up to ₹20,000 at a time would be available from May 23, and will continue till September 30, the central bank said.
The RBI has advised banks to stop issuing ₹2000 denomination banknotes with immediate effect.
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