Mumbai, Feb 25: The Reserve Bank of India‘s (RBI) decision to remove Rs 2,000 banknotes had an impact on the growth in money in circulation, which slowed to 3.7% for the week ending February 9 from 8.2% a year earlier. Notes and coins in circulation are referred to as currency-in-circulation (CiC), whereas notes and coins in circulation less cash held by banks is referred to as currency with the public. The RBI claims that double-digit rise in deposits was reported by commercial banks in January, and that this increase is also related to the withdrawal of Rs 2,000 in currency notes. According to RBI data, the growth of Reserve Money (RM) slowed to 5.8% on February 9, 2024, from 11.2% on the same day the previous year (8.8% adjusted for the first-round impact of changes to the Cash Reserve Ratio (CRR). CiC, bank deposits at the RBI, and other deposits with the central bank are components of RM. Due to the elimination of Rs 2,000 in banknotes, the increase in CiC, the largest component of RM, slowed to 3.7% from 8.2% a year earlier, according to the RBI. The RBI declared on May 19, 2023, that banknotes with a face value of Rs 2,000 will no longer be in circulation. As of January 31, only roughly Rs 8,897 crore worth of Rs 2,000 banknotes remained in circulation, with nearly 97.5% of the notes having been returned to the banking system. When the withdrawal of Rs 2,000 banknotes was announced on May 19, 2023, at the close of business, the total amount of Rs 2,000 banknotes in circulation was Rs 3.56 lakh crore. The initial request was made to the public and entities in possession of these notes to exchange them or place them in bank accounts by September 30, 2023. Later, the deadline was moved until October 7, 2023. On October 7, 2023, deposit and exchange services were terminated at bank branches.Beginning on October 8, 2023, people would have the option of exchanging their cash or having the equal amount credited to their bank accounts at any one of the 19 RBI locations. November 2016 saw the introduction of the Rs 2,000 banknotes, which replaced the then-current Rs 1,000 and Rs 500 banknotes.
