RBI Halts Printing of 2000 Rupee Notes; 200 Rupees Notes to Follow?

The Reserve Bank of India has stopped the printing of 2000 Rupee Notes and has now started printing 200 rupee notes. Can one expect another round of demonetization? This time for 2000 rupee notes.

Excess of Cash Lying in the Banks and ATMs

RBI has already printed enough of 2000 rupee notes. The amount is more than 1000 rupee notes which were in tender before the demonetization drive. There were 6.3 billion 1000 rupee notes of worth 6.3 lakh crores but the new 2000 rupee notes account to 3.7 billion which is 7.4 lakh rupees, more than the total amount of 1000 rupee notes. Banks officials have felt that there is excess of cash out in the ATMs and banks and are in the form of 2000 rupee notes.

This is the major reason why the RBI has stopped the printing of 2000 rupee notes. The other reason is the introduction of 200 rupee notes in the market from next month by the RBI. 200 rupee notes are basically to help the consumers who have trouble in getting the change of 2000 rupee notes. Also, the government is keen to enhance digital payment therefore excess of cash will certainly disturb the flow of digital transactions.

Another Round of Demonetization?

Experts have predicted that the introduction of 2000 rupee notes was to compensate the sudden and huge removal of currency in the form of 1000 and 500 rupee notes that amount to 86% of the currency flow. Therefore if the government withdraws 2000 rupee notes then it won’t be a surprise. The question is whether the government will do a sudden demonetization like November 08 or will slowly withdraw the note by minimizing its flow.

There is already 84% of cash available of the pre-demonetization value and the cash is in excess. Demonetization drive was not only to curb black money and counterfeit notes but was also to limit cash flow and enhance digital transaction. This step might be towards the same from a different perspective. Maybe the government keeps on minimizing the amount of 2000 rupee notes slowly till a period of time and then suddenly makes it illegal tender. For this we need to wait and watch.