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2000 Note Band – Will Rs2000 Note Withdrawal Affect Market?

2000 Note Band

2000 Note Band News

The Reserve Bank of India has made a drastically surprising decision to withdraw the denomination of Rs2000 notes by September 30, 2023, and claimed it would have no to minimal effect on the market and economy, unlike the 2016 demonetization that caused unrest in the country. The 2000 note band will still continue to be legal tender, which is chaotic for the RBI.

Table of Contents

2000 Note Launch Date

  • The Reserve Bank of India (RBI), launch the 2000 rupee note on November 8, 2016.

2000 Note Last Date

  • Exchange facility for Rs 2000 notes until September 30, 2023.

With the decline in the usage and circulation of the 2000 note band in recent years, the RBI paused the printing of the notes in 2018-19. The RBI claims that the Rs2000 notes have already finished their lifespan and the RBI stresses on clean note policy that many developed countries follow. These withdrawal steps can be hinted at the promotion of digitization and usage of another mode of the online transaction by the central government.

The value of the Rs2000 notes has fallen rapidly from Rs 6.73 lakh crores to Rs3.62 lakh crores in recent years, it was as good as not being in circulation as it is the least used denomination in the economy; this is the reason it will not have a major impact on the share market and the economy as a whole. There will be a few positive and negative effects of the 2000 note band. The cash-intensive sectors such as small-scale industries, cottage industries, agriculture, micro industries, and homemakers will be affected the most by this withdrawal.

If there are negative impacts there are positives as well. With the withdrawal, the Rs2000 note band which was kept idle will be used for transactional purposes and can upscale demand for products and services. These notes will be injected into the economy again and will be easier to withdraw since these notes are out of the cupboards, safes, and wallets. Banks too will benefit from the step of withdrawal which will ease the deposit rate hikes and help to grow the bank credit.

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