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BUSINESS EYE JUNE 02, 2023 | The Indian Eye 34

Demonetization, again?

Banks, industry see no impact

of withdrawal of Rs 2000 notes

In digital payments, India has been witnessing new milestones, in both value and volume terms, which indicate
the robustness of our payment ecosystem and acceptance

OUR BUREAU

New Delhi
n a sudden move last week, the
Reserve Bank of India (RBI) de-
Icided to withdraw the Rs 2000
denomination currency notes from
circulation, but added they will con-
tinue to remain as legal tender. RBI
had advised banks to stop issuing Rs
2000 denomination banknotes with
immediate effect.
But noting that there is no reason
for worry over the move to withdraw
Rs 2000 notes, which continue as le-
gal tender, Reserve Bank of India
Governor Shaktikanta Das has said
the central bank has “more than ade-
quate” notes of other denominations
available.
There has been some specula-
tion that the decision to withdraw
Rs 2000 note may put a strain on A man clicks a selfie with Rs 2000 currency notes prior to exchanging it at a bank following the RBI’s decision to withdraw its circulation (ANI Photo)
the overall money supply. “Let me
assure you, we have more than an
adequate quantity of notes available, taken out from the system when the Kanti Ghosh, Group Chief Economic There will be no impact of RBI’s
already printed. We have more than legal tender status of then-prevailing Adviser, said. decision to withdraw Rs 2000 curren-
an adequate quantity of printed notes Rs 1000 and Rs 500 notes was with- The report said the Rs 500 note cy notes from circulation on business-
already available in the system - not drawn during demonetization. has become the major bank note es and transactions in the pharma
just with the RBI but also at the cur- “That purpose has been fulfilled. among the masses and constituted industry, said Siddharth Mittal, MD
rency chests which are operated by Today there are enough notes in circu- 73.3 per cent of the total value of cur- and CEO of Biocon and noted that
the banks. So, there is adequate stock lation of other denominations,” he said. rency notes as of March. there has been no panic reaction
available and there is no reason to The withdrawal of Rs 2,000 According to SBI Research, the among people.
worry,” Das told reporters here. banknotes is likely to be a non-event central bank RBI has ensured that Mittal told ANI in an interview
Speaking about the September as India has adopted digital payments the share of the high-value Rs 2000 that a large portion of retail sales in
30 deadline exchange of Rs 2000 on a mass scale, said SBI Research note moved down gradually, thus pharmacies happen through digital
notes, he said a date was decided so in its latest Ecowrap. In digital pay- paving the way for the removal from modes. “As an industry, quite honestly,
that people take the process serious- ments, India has been witnessing new circulation altogether. The total value I particularly don’t feel there would be
ly and it does not become endless. “... milestones, in both value and volume of these banknotes in circulation has any impact on businesses and trans-
Time is given up to September 30 (for terms, which indicate the robustness declined from Rs 6.73 lakh crore at actions, including retails. A large por-
exchange of notes) so that it is taken of our payment ecosystem and accep- its peak in March 31, 2018 (37.3 per tion of retail sales through pharmacies
seriously, otherwise, if you leave it tance. “Our research suggests that cent of Notes in Circulation) to Rs happens through digital modes (using
open-ended, it becomes a kind of an Rural and Semi-Urban areas are now 3.62 lakh crore constituting only 10.8 UPI). Drug industry that way is insu-
endless process,” Das said in the in- accounting for 60 per cent of share in per cent of Notes in Circulation on lated from financial pressures. Any-
teraction with the media. UPI value/volume, dismantling the March 31, 2023, RBI said. About 89 way, RBI also said the Rs 2000 will
Currency notes of Rs 2000 de- popular perception that metro/ur- per cent of the Rs 2000 denomination continue to be legal tender,” he said.
nomination were primarily issued for ban areas are hotbeds of digital pay- banknotes were issued prior to March “I have not seen any panic-like sit-
the purpose of quickly replenishing ment adoption and innovations,” the 2017 and are at the end of their esti- uation so far and hence I feel it will
the value of money which was being Ecowrap report authored by Soumya mated life span of four-five years. not impact our industry,” he added.

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