New Delhi, May 19 (IANS): The Reserve Bank of India (RBI) on Friday said that it will withdraw the Rs 2,000 denomination banknote from circulation but it will continue as legal tender.

In a statement, the RBI said: "The 2,000 denomination banknote was introduced in November 2016 primarily to meet the currency requirements of the economy in an expeditious manner after the withdrawal of legal tender status of all 500 and 1,000 banknotes in circulation at that time.

"The objective of introducing 2,000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, printing of 2,000 banknotes was stopped in 2018-19," the RBI said.

The RBI said that about 89 per cent of the 2,000 denomination banknotes were issued prior to March 2017 and are at the end of their estimated life-span of 4-5 years.

"The total value of these banknotes in circulation has declined from Rs 6.73 lakh crore at its peak as on March 31, 2018 (37.3 per cent of notes in circulation) to Rs 3.62 lakh crore constituting only 10.8 per cent of Notes in Circulation on March 31, 2023," it said.

The RBI also pointed out that this denomination is not commonly used for transactions and further, the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public.

"In view of the above, and in pursuance of the 'Clean Note Policy' of the Reserve Bank of India, it has been decided to withdraw the 2,000 denomination banknotes from circulation," the RBI said, adding: "The banknotes in 2,000 denomination will continue to be legal tender."

It also said that all banks shall provide deposit and/or exchange facility for 2,000 banknotes until September 30, 2023.