Cash with public falls by Rs 83,242 cr after RBI Move to Withdraw Rs 2,000 note

New Delhi (India), 17th June 2023: Following the withdrawal of Rs 2,000 notes by the Reserve Bank of India (RBI), cash in circulation has decreased by Rs 83,242 crore to Rs 32.88 lakh crore as of June 2, 2023, according to the most recent RBI data.

According to an expert, cash in circulation typically climbs during this time due to withdrawals throughout the sowing season. However, the decision on Rs 2,000 notes has negated this.

The RBI announced the withdrawal on May 19, stating that the total amount of these notes in circulation as of March 31, 2023 was Rs 3.62 lakh crore. Since the announcement of their withdrawal, around Rs 1.8 lakh crore, or 50% of the Rs 2,000 banknotes in circulation, have returned to the banking system, according to RBI Governor Shaktikanta Das on June 8.

Meanwhile, bank term deposits increased by Rs 2,68,262 crore in the two weeks ending June 2, 2023. They had fallen by Rs 3,998 crore in the previous two weeks, which concluded on May 19, 2023.

According to Abheek Barua, Chief Economist at HDFC Bank, the decrease in the currency with the public shows an increase in the deposit of Rs 2,000 notes into banks.

He further stated, “Typically, in this period there is a lot of cash withdrawal because of the (crop) sowing season. So, currency in circulation usually goes up a little in this period. However, with this (Rs 2,000 bank note deposit) specific phenomenon, it has kind of offset that effect (higher currency with public during sowing season).”