The Reserve Bank of India (RBI) has issued a directive to Indian banks to ensure that 75% of the country’s ATMs dispense ₹100 and ₹200 notes by September 2025. This move is expected to reduce dependency on the ₹500 note, signaling a possible shift in the currency landscape. Experts are now speculating whether the ₹500 note might follow the path of the ₹2000 note and be gradually phased out. Let’s explore what experts think about this development.
RBI’s Focus on Reducing Dependency on Large Denominations
According to banking expert and Founder of Voice of Banking, Ashwini Rana, the RBI aims to reduce reliance on higher denominations like ₹500 by encouraging the circulation of ₹100 and ₹200 notes through ATMs. This is similar to how the ₹2000 note was gradually withdrawn from circulation, and now, a similar approach may be taken with the ₹500 note.
Is the ₹500 Note Next to be Phased Out?
Ashwini Rana suggests that, just as the ₹2000 note was removed from circulation, the ₹500 note might also face a similar fate in the future. While the RBI has not officially confirmed this, Rana believes that it is possible that such a decision could be made in the coming years.
Why This Decision Could Be Taken
With the increasing rise of digital transactions in India and the RBI’s preparations to introduce the digital currency, e-RUPI, the central bank is looking to reduce the cost of printing currency. The production of physical currency is expensive, and therefore, the RBI is keen on circulating smaller denominations like ₹100 and ₹200 notes more effectively through ATMs, reducing the need for larger notes like ₹500.
Could ₹500 Notes Follow the ₹2000 Note’s Fate?
Experts believe that just as the ₹2000 note saw a reduction in circulation, the ₹500 note might also see a gradual decline. This would encourage the usage of smaller denominations in the country. Rana also advises individuals who are stockpiling ₹500 notes to be cautious, as they could face a situation similar to the ₹2000 notes, which were once abundant but now rarely used.
