The Reserve Bank of India's decision to withdraw its highest denomination currency note from circulation is likely to improve banking system liquidity, bringing down recently elevated short term rates, analysts and bankers said.
Pointing out that there is enough supply of lower-denomination notes for exchange purposes even after the withdrawal of Rs 2,000 notes, Shaktikanta Das underlined that there is no reason to rush to banks.
The Rs 2000 note will remain legal tender but citizens have been asked to deposit or exchange these notes by 30 September. Analysts say this time the move is expected to be less disruptive as a lower value of notes is being withdrawn over a longer period of time