With election around the corner, ₹2,000 notes get scarce

M Somasekhar/G Naga Sridhar Hyderabad | Updated on April 02, 2019

The dearth of ₹2,000 notes is acute in many locations in the North and the South   -  AP

RBI closing the tap on fresh supply adds to paucity of high-value currency

You may have recently found those crisp pink ₹2,000 notes eluding you, both at ATMs and bank branches. Blame it on the elections.

“There has been pressure on the supply and availability of ₹2,000 notes in some areas — in the South and North — over the past three months, which has only gone up after the notification of elections,” a senior executive at a major public sector bank told BusinessLine.

The shortage has been attributed to two main factors — ‘hoarding’ of notes for illegal distribution to voters, and the absence of any significant additional supply of new notes of this denomination since March 2018. In reports of seizure of currency by enforcement agencies in recent weeks, ₹2,000 notes figure prominently.

Intrinsic link

There seems to be an intrinsic link between elections and the availability of higher denomination notes.

“The shortage was also noticed when Assembly elections were held in Madhya Pradesh, Rajasthan and Telangana last year,” remarked the bank official.

The paucity has been acute in many locations, particularly in Andhra Pradesh, Telangana and Uttar Pradesh. The phenomenon is urban as well as rural, according to bankers.

A field-check done by BusinessLine at several cash machines in Andhra Pradesh and Telangana over the past week revealed that they have not been stocked with ₹2,000 notes.

In Hyderabad, for instance, 20 ATMs of different banks at various locations offered only ₹500 notes and ₹100 notes in old design.

A similar trend was reported in various other districts including Mahbubnagar, Warangal and Karimnagar.

An IDBI Bank officer in Andhra Pradesh’s Krishna district said: “Two thousand rupee notes are coming off and on, but in limited number.”

According to RBI data, there has been only a marginal increase in the total number of ₹2,000 notes over the past two years.

No new notes

Bankers say the central bank has stopped supplying new series of ₹2,000 notes as it has reportedly stopped printing this denomination.

The volume of ₹2,000 notes went up from 328.5 crore pieces (valued at ₹6.6 lakh-crore) in 2017 to 336.3 crore (₹6.7 lakh-crore) in 2018. In value terms, ₹500 and ₹2,000 notes account for 80.2 per cent of the total value of currency in circulation.

Bankers expect the shortage of ₹2,000 notes to continue till the elections are over.

Published on April 02, 2019

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