Source: RBI
Context:
The Reserve Bank of India (RBI) announced the withdrawal of ₹2000 denomination banknotes on May 19, 2023. RBI periodically updates the status of returned notes. As of August 31, 2025, almost all ₹2000 notes have been returned.
Background
₹2000 note was introduced in November 2016 (post-demonetisation) to quickly meet currency needs.
RBI’s Clean Note Policy
RBI Act, 1934
- Section 24: RBI’s power to determine denominations.
- Section 26(2): Central Government, on RBI’s recommendation, can declare any banknote to cease as legal tender.
Impact
- On Public: Minimal impact since deposits/exchanges were allowed widely.
- On Economy: Improved currency management, reduced hoarding of high-value notes.
- On Banks: Temporary workload during deposit/exchange phase, now shifted to RBI Issue Offices.
Sources of Income of RBI
| Source of Income | Explanation | Example |
|---|---|---|
| Seigniorage (Currency Issuance) | Profit earned from issuing currency at face value higher than printing cost | Printing a ₹500 note costs ~₹5, but RBI issues at ₹500 → profit = ₹495 |
| Investment in Foreign Assets | Earnings from interest on foreign exchange reserves invested in safe securities | US Treasury bonds, Euro Govt bonds |
| Government Securities (Domestic) | Interest income from GoI bonds & Treasury bills held by RBI | Holding G-Secs bought during OMO operations |
| Lending to Banks (Repo/MSF) | Interest earned from short-term lending to commercial banks | Repo rate lending to SBI, HDFC Bank |
| Government Debt Management Fees | Commission for managing central & state govt borrowings | Issuing and servicing G-Secs on behalf of Govt |
| Banking Services Fees | Charges for providing settlement and payment systems | RTGS/NEFT transactions, cheque clearing |
| Other Investments (Gold, Bonds) | Returns from gold reserves & other financial instruments | Income from RBI’s gold holdings |
