Rs 2,000 notes will be pulled out from circulation, an RBI circular said 19 May.
The notes will stay legal tender, according to RBI.
The move is in compliance with the Reserve Bank of India's "Clean Note Policy," as per the circular.
Banks have been asked to offer deposit and/or exchange service for Rs 2,000 notes until 30 September.
Banknote holders can exchange or deposit Rs 2,000 banknotes at any bank branch.
Deposits can be made without restrictions, following standard procedures and statutory provisions.
The exchange of Rs 2,000 notes into those of other denominations can be made up to a limit of Rs 20,000 at a time, starting from 23 May.
The value of Rs 2,000 banknotes in circulation dropped from a peak of Rs 6.73 lakh crore (37.3 per cent of notes in circulation) on 31 March 2018 to Rs 3.62 lakh crore (10.8 per cent of notes in circulation) as on 31 March 2023.
The Rs 2,000 note was launched in November 2016, via Section 24(1) of the RBI Act, as a quick-fix to meet cash needs after the withdrawal of legal tender status for the Rs 500 and Rs 1,000 notes.
The printing of Rs 2,000 banknotes was discontinued in 2018-19 as other denominations became available in adequate quantities, according to the RBI circular.
About 89 per cent of the Rs 2,000 banknotes were issued prior to March 2017 and are at the end of their estimated life span of 4-5 years.
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