Nearly 80% Indians depositing Rs 2,000 notes instead of exchanging: Report

More than 70 per cent of Indians are opting to deposit the recently withdrawn Rs 2,000 notes in bank accounts.

According to a Reuters report published Wednesday, people are choosing to deposit as opposed to exchanging the Rs 2,000 note for smaller denominations, which was recently withdrawn by the Reserve Bank of India (RBI).

Citing six private and public bankers the report added that this trend of depositing is likely to boost bank deposits. 

Back in May 2023, the central bank said that it would withdraw Rs 2,000 notes from circulation and allowed people to exchange or deposit these notes latest by September 30, 2023.

RBI has set the exchange cap at Rs 20,000 for one-time, while there is no limit on depositing Rs 2,000 notes. The RBI said that when the decision was announced, the value of the notes in circulation was Rs 3.6 trillion.

The report added that according to bankers, nearly 80 per cent of the notes received have been deposited in the accounts, even though the total quantum of Rs 2,000 notes deposited or exchanged so far is unavailable.

India's largest public lender State Bank of India (SBI) has so far received Rs 17,000 crore in the first week, ever since the exercise began on May 23, the report added citing an official. Out of this, Rs 14,000 crore, or nearly 82 per cent was deposited back into the accounts, while the remaining 18 per cent, or Rs 3,000 crore was exchanged.

Bank of Baroda (BoB), Union Bank of India, and Bank of India (BoI) stated that 80 per cent- 90 per cent of the notes were deposited.

Citing RBI data, the report added that the inflow of notes can push up bank deposit growth from the current 10.9 per cent and reduce the currency in circulation (CIC), which dropped to Rs 365,00 crore in the week ending May 26.

(With inputs from Reuters)