RBI said in a press release that it is going out of circulation of Rs 2000 notes. However, they will remain legal tender. People can deposit or exchange these notes by visiting banks from May 23 to September 30.
There are many benefits of demonetizing the Rs 2000 note. The biggest advantage is that this will curb black money to a great extent. It has been seen that the main use of Rs 2000 is being used to hide black money.
Former RBI deputy governor R Gandhi says that the demonetization of Rs 2,000 notes will go a long way in curbing black money. Gandhi said that people were hoarding these 2000 rupee notes. When a 2000 rupee note will be out of circulation then people will not be able to use it as black money. This will curb black money to a great extent. At the time of demonetization in 2016, Gandhi was the head of the currency department in the RBI.
Online payment will accelerate after the 2000 note is out of circulation. Even after demonetization in 2016, there was a tremendous jump in online payments.
Former Chief Economic Advisor Krishnamurthy Subramanian said on Saturday that the move would help in weaning out a major part of the Rs 3.6 lakh crore currency in circulation in Rs 2,000 notes.
With the Rs 2000 note out of circulation, people will be scared of keeping large amounts of cash in their homes. Its direct effect will be that there will be a reduction in black money.
2,000 notes made it easier to make large payments in cash. But making large payments in 200, 100, and 500 notes can be a hassle. In such a situation, these people can adopt the route of online payment. Due to this, the payment will remain in the record and people will not be able to avoid tax liability.