At a briefing today, RBI governor Shaktikanta Das answered various questions regarding the withdrawal of Rs 2,000 currency notes from circulation.
The Rs 2,000 was introduced with the primary purpose of quickly replenishing the value of money that was being taken out of the system via demonetisation, Das said.
As that purpose has been fulfilled, and there are enough notes of other denominations now, the decision was taken to withdraw these notes, he said.
The printing of those notes has also been stopped, the Governor pointed out.
Das urged people to see this particular exercise as part of currency management operation of the Reserve Bank of India.
The RBI will see how much of these notes come back to banks, and then decide on possible extension of the September 30 deadline, Das said.
As regards why there was a deadline for exchanging these notes when they are going to continue as legal tender, he said that unless a particular time is stipulated, the process won’t reach finality as people won’t take it seriously.
Without a date, it runs the risk of becoming some kind of an endless process, he added.
As for the inconvenience people are likely to face while exchanging Rs 2,000 notes, Das said, “I do not expect a rush to bank branches. There is no reason to rush to banks. There is time for 4 months,” he said.
“We expect most of the notes to come back by September 30. Let me assure that people who are abroad and within India, we will be sensitive to the difficulties you may face. It will be our endeavour to address the difficulties of people,” the Governor said.
There is no cause for worry as there are more than sufficient printed notes available in the system, Das said. He also dismissed fears of any impact of the move on the economy.
Introduction of more Rs 500 notes will depend on public demand, he said.
Touching upon the issues faced by people while doing business with the highest-denomination note, Das said, “Many shops earlier also didn’t accept Rs 2,000 notes. They insisted on digital payments. There was a reluctance to accept Rs 2,000 notes earlier, which has now probably aggravated.”
“The integrity of Indian currencies continues. The security feature of these notes has not been breached,” Das said.