Statement by the Government Regarding the ₹500 Note – Discontinuation of ₹500 Notes?
On Monday, the Indian government stated that the deadline for the exchange of ₹2,000 notes would not be further extended beyond September 30, 2023. Minister of State for Finance Pankaj Chaudhary, in a written reply to the Lok Sabha, further said there are no plans to set a new date for exchanging ₹2,000 notes.
Government’s Clarification on ₹500 Note
In the Lok Sabha, another question was raised — Does the government plan to withdraw ₹500 notes to combat black money? The Finance Ministry was very clear in its response:
“There is no such consideration at present.”
The note is now the highest denomination in circulation; the government has no plans to withdraw the ₹500 note at this time. Should any decisions be made in this regard in the future, the public will be fully informed ahead of time.
A Major Decision on the ₹2,000 Note
On May 19, 2023, the Reserve Bank of India (RBI) announced the withdrawal of the ₹2,000 note from circulation; however, citizens were provided time until September 30, 2023, to deposit such notes into their bank accounts or exchange them for other denominations.
The RBI noted that 76% of the ₹2,000 notes in circulation were deposited or exchanged in banks.
In terms of value, the ₹2,000 notes were worth ₹3.56 lakh crore on May 19, which reduced to ₹84,000 crore by June 30.
This is Not a Demonetization-Like Situation
In the Lok Sabha, the Minister said that this was not demonetization but just a currency management exercise. The aim was to slowly phase out high-value notes in a way that would least inconvenience the general public and avoid any adverse impact on the economy.
Reports from the Central Bank indicated that 87% of returned ₹2,000 notes were deposited in banks, while 13% were exchanged for smaller denomination notes.
Background of 2016 Demonetization
It is to be noted that the giant demonetization was done by the Modi government in 2016, whereby the old notes of ₹500 and ₹1,000 were put out of circulation.
Only after this were the new notes of ₹2,000 and ₹500 introduced in the market.
Once again, now the ₹2,000 note is out of circulation, while for the ₹500 note, it is still a waiting game.
Discontinuation of the ₹500 Note: Possible Future Plans?
The government’s current statement once again clarifies that there are no immediate plans on the ₹500 note.
This note is also the most commonly used in day-to-day transactions.
The government further stated that if any decision is taken in this regard in the future, the public will be informed well ahead of time.
Conclusion
The government has clarified that the deadline for the exchange of the ₹2,000 note was September 30, 2023, and it will not be extended. Also, there are no plans to discontinue the ₹500 note. According to the Finance Ministry, the ₹500 notes remain the largest denomination, are well established, and will continue to remain in circulation in the country.
This also ensures that both the government and RBI are managing currency in a balanced and planned manner so that common people do not face any problems.
In Short:
- ₹2,000 notes are out of circulation.
- No new plan has been worked for ₹500 notes.
- People need not panic; the ₹500 note shall not go out of circulation.
