Get All Access for $5/mo

Withdrawal Of INR 2000 Notes Is a Non-Event In India, Says SBI The report also said that the digital payments in India has been witnessing new milestones, in both value and volume terms

By Teena Jose

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Freepik

The State Bank of India (SBI) on Tuesday in its latest Ecowrap report stated that the withdrawal of INR 2000 bank notes is likely to be a non-event as India has adopted digital payments on a mass scale. It also added that 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.

The central bank last Friday announced the withdrawal of INR 2,000 denomination banknote but said it will continue to remain a 'legal tender' before it is phased out in a time-bound manner. To complete the procedure in a timely manner and to provide adequate time to citizens, all banks have been asked to provide a deposit or exchange facility for INR 2,000 banknotes until September 30, 2023.

According to SBI Research, the central bank RBI has ensured that the share of the high-value INR 2000 note moved down gradually, thus paving the way for the removal from circulation altogether. Adding on, the INR 500 note has reportedly become the major bank note among the masses and constituted 73.3 per cent of the total value of currency notes as of March.

The RBI also revealed that the total value of these banknotes in circulation has declined from INR 6.73 lakh crore at its peak in March 31, 2018 (37.3% of notes in circulation) to INR 3.62 lakh crore constituting only 10.8% of notes in circulation on March 31, 2023. Furthermore, about 89% of the INR 2000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life span of four-five years.

"We believe that almost the entire amount of INR 3.6 trillion will come back to the banking system. Of the remaining INR 3 lakh crore, if we assume MPC of 0.7, INR 2-2.1 lakh crore would be spent by the consumers (either direct purchase or by exchanging it with smaller denominations notes), approximately INR 1 lakh crore is destined deposits in banks," said the SBI report.

"Decoding exchange/deposit dynamics, we understand, banks will already be holding some of these notes in their currency chests, thus the impact on deposits will be limited," it further noted.

Teena Jose

News Desk Reporter with Entrepreneur India

Teena is a post graduate in financial journalism. She has an avid interest in content creation, digital media and fashion.
Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Growth Strategies

Amazon To Improve Services In Tier II, III Cities: Samir Kumar, Country Manager

The bigger share of our business is coming from Tier II,III and beyond, says Samir Kumar, country manager, Amazon India

News and Trends

AWE Funds to Scale Women-Led ClimateTech Initiatives with CGEF Grant

The grant will empower AWE Funds to expand initiatives, invest in women-led climate companies, enhance accelerator programs, and launch a fellowship nurturing young women professionals in climate and sustainability.

News and Trends

Former Cleartrip CEO Ayyappan R Eyes Quick Commerce with FirstClub

After stepping down as Cleartrip's CEO earlier this year, Ayyappan brings his expertise from leading positions at Flipkart, including his role as chief business officer at Myntra.

Business News

These Companies Offer the Best Work-Life Balance, According to Employees

The ranking is based on Glassdoor ratings and reviews.

News and Trends

Multiples Private Equity Leads INR 1000 Cr Funding in Shubham Housing

With the raised funds, the Gurugram-based platform aims to propel its growth trajectory, diversifying its product offerings and strengthening its national footprint.