₹2,000 Note Withdrawal: Currency Growth Dips to 3.7% in February. The decline in currency circulation is partially linked to the Reserve Bank of India’s (RBI) move to withdraw Rs 2,000 banknotes.
According to a report by news agency PTI on Sunday:
The growth rate of currency in circulation fell to 3.7 percent for the week ending February 9. It went down from 8.2 percent a year earlier.
Currency in circulation (CiC) encompasses all notes and coins in circulation, while currency with the public refers to notes and coins in circulation excluding cash held by banks.
Impact of Rs 2,000 Banknote Withdrawal:
The decline in currency circulation is partly attributed to the Reserve Bank of India’s (RBI) decision to withdraw Rs 2,000 banknotes. Additionally, Commercial banks have also reported double-digit growth in deposits in January. Moreover, which can be linked to the withdrawal of Rs 2,000 currency notes.
Deceleration in Reserve Money Growth:
As of February 9, 2024, the growth rate of Reserve Money (RM) slowed to:
RM components include:
- Currency in Circulation (CiC)
- banks’ deposits in RBI
- other deposits with the central bank
According to RBI:
On May 19, 2023, the central bank made public its decision to phase out the circulation of Rs 2,000 denomination banknotes. Moreover, By January 31, nearly 97.5 percent of these Rs 2,000 banknotes had been returned to the banking system. It left approximately Rs 8,897 crore worth of such notes still in circulation among the public.
At the time of the announcement of the withdrawal on May 19, 2023:
the total value of Rs 2,000 banknotes in circulation amounted to Rs 3.56 lakh crore.
Initially, individuals and entities holding such notes were instructed to either exchange or deposit them into bank accounts by September 30, 2023. However, this deadline was subsequently extended to October 7, 2023. Additionally, Deposit and exchange services at bank branches ceased on October 7, 2023.
The introduction of Rs 2,000 banknotes occurred in November 2016. As part of the demonetization process. Moreover, It involved discontinuing the circulation of the existing Rs 1,000 and Rs 500 banknotes.
