India to withdraw 2,000-rupee notes from circulation
India will start withdrawing its highest value currency notes from circulation, the central bank said on Friday, in a move that economists said could boost bank deposits at a time of high credit growth.
The withdrawal of 2,000-rupee ($24.5) notes – which the finance ministry’s top official, T.V Somanathan, said would not cause disruption “either in normal life or in the economy” – also comes ahead of elections in four large states at the end of the year and a national ballot in spring 2024.
Most of India’s political parties are believed to hoard cash in high denomination bills to fund election campaign expenses to get around tough spending limits imposed by the Election Commission.
Announcing the withdrawal, the Reserve Bank of India (RBI) said evidence showed the denomination was not being commonly used for transactions.
The notes will remain legal tender, it added, but people will be asked to deposit and exchange them for smaller denominations by Sept. 30.
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