Tag: RBI

India Phases Out ₹2,000 Notes, Sets September 30 Deadline for Exchange

Staff ReporterIndia, Money 0

New Delhi: The Reserve Bank of India (RBI) has announced its decision to phase out ₹ 2,000 notes and has set a deadline of September 30 for people to exchange or deposit them in their bank accounts. Starting May 23, the RBI’s 19 regional offices and other banks will accept ₹ 2,000 notes in exchange for lower denomination currency. It is important to note that these notes will continue to be considered legal tender, as stated by the RBI.

The RBI has instructed all banks to cease issuing ₹ 2,000 notes with immediate effect.

The introduction of the ₹ 2,000 note took place in November 2016 after Prime Minister Narendra Modi’s sudden demonetization move, which rendered high-value ₹ 1,000 and ₹ 500 notes invalid overnight.

The RBI explained its decision, stating, “The purpose of introducing ₹ 2,000 banknotes was fulfilled once banknotes of other denominations became sufficiently available. Consequently, the printing of ₹ 2,000 banknotes was discontinued in 2018-19.”

To ensure convenience and minimize disruption to regular banking operations, the RBI has allowed the exchange of ₹ 2,000 notes for lower denomination notes, up to a limit of ₹ 20,000 at a time, at any bank beginning May 23, 2023. This facility will be available until September 30, allowing individuals to either exchange or deposit their ₹ 2,000 notes.

Sources informed NDTV that the RBI might extend the deadline beyond September 30 if necessary. However, even after the current deadline, ₹ 2,000 notes will remain valid as legal tender.

The RBI highlighted that approximately 89% of ₹ 2,000 denomination banknotes were issued before March 2017 and are reaching the end of their expected lifespan of four to five years. The total value of these notes in circulation decreased from ₹ 6.73 lakh crore at its peak on March 31, 2018 (comprising 37.3% of the currency in circulation) to ₹ 3.62 lakh crore, representing only 10.8% of the currency in circulation as of March 31, 2023.

The central bank emphasized that the ₹ 2,000 note is not commonly used for transactions. Similar measures were taken by the RBI in 2013-2014 when certain notes were phased out of circulation.

Adani Crisis May Spark Wider Financial Turmoil In India

Staff ReporterIndia, Money 0

Both the Houses of India’s parliament were adjourned on Friday last week amid chaotic scenes as some lawmakers demanded an inquiry following the meltdown of shares in billionaire Gautam Adani’s group companies, which some fear could spark wider financial turmoil. Opposition parties continue to highlight that Life Insurance Corporations (LIC) of India’s and State Bank of India’s (SBI) high exposure to stocks in the Adani Group can have wider economic repercussions.

Picture : Bloomberg

Shares in Adani companies recovered after sharp falls, but the seven listed firms have still lost about half their market value – or more than $100 billion combined – since U.S. short-seller Hindenburg Research last week accused the group of stock manipulation and unsustainable debt, Reuters reported.

The Reserve Bank of India on Friday said India’s banking sector is “resilient and stable” and the central bank maintains constant vigil on the lenders, in a statement issued in the light of the Adani crisis, triggered by a US-based short seller’s allegations of stock manipulation, fraud and use of tax havens by the Adani Group.

The stock rout led to Adani Group losing around $108 billion since Hindenburg Research published its report on January 24. But signs of recovery were visible on Friday.

But the government differs

Talking about the risks to the Indian banking system and lenders emanating from the ongoing crisis, Finance Minister Nirmala Sitharaman on Friday said that the country’s banking system is in a sound position. “They (LIC and SBI) have very clearly said that their exposure (to Adani Group stocks) is very well within the permitted limits and with valuation falling as well, they are still over profit. That is the word from the horse’s mouth,” Sitharaman said in an interview with CNBC-TV18.

The stock market turmoil created by the rout in Adani group shares is a “storm in a teacup” from a macroeconomic point of view, finance secretary TV Somanathan said on Friday, emphasising that India’s public financial system is robust. The senior-most bureaucrat in the finance ministry also said that movements in the stock market per se is not the government’s concern and there are independent regulators to take necessary action. Read more here.

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