The Reserve Bank of India (RBI) has announced a surprise move to withdraw Rs 2,000 currency notes from circulation by September 30.
The central bank has given the public the option to either deposit the notes in their accounts or exchange them at banks.
The exchange facility will begin on May 23 and will continue till September 30. No form or slip is required for exchanging up to Rs 20,000 at a time.
In a fresh circular to banks on Monday, RBI has directed banks to maintain daily data on deposits and exchange of Rs 2,000 notes in a simple, fixed format.
RBI has also instructed banks to stop issuing Rs 2,000 notes with immediate effect. However, the notes will continue to be legal tender unlike the demonetised Rs 500 and Rs 1,000 notes in 2016.
Around 89% of the Rs 2,000 notes were issued before March 2017 and are at the end of their estimated life span, RBI said, highlighting that Rs 2,000 notes are not commonly used.
Banks have also been asked to provide facilities like shaded waiting spaces and drinking water to customers, considering summer.
Reports suggest, the decision has triggered a frenzy among people to buy gold and foreign currency with the Rs 2,000 notes. Jewellers across the country have reported a surge in inquiries and sales after the announcement.
Customers who want to use up their Rs 2,000 notes for fuel purchases have faced rejection by some petrol pump operators. Payments in Rs 2,000 notes have increased by at least five times, PTI reported.
The Confederation of All India Traders (CAIT) has said that the withdrawal of Rs 2,000 notes will not affect the small traders but will hit the big and affluent class who deal in cash transactions.