The news of the Rs 500 note being discontinued has been in the news for the last few days. There is speculation that the Reserve Bank of India (RBI) may withdraw the Rs 500 note from the market like the Rs 2000 note.

Although there has been no official announcement from the regulator about the Rs 500 note, according to experts, the Rs 500 note may be discontinued by March 2026. There are three main reasons behind this.

Banking expert Ashwini Rana said that the RBI may discontinue the Rs 500 note by March 2026. he said that the RBI will not decide to discontinue this note all at once like demonetization. Instead, it will first reduce the circulation of this note in the market. For this, the bank may increase the circulation of Rs 100 and Rs 200 notes. The number of these notes will be increased in the ATMs of the banks and the Rs 500 notes will be gradually withdrawn from the market and deposited in the banks. This process will not be completed in a day. RBI may implement a plan for this. It is likely to take a decision on this by March 2026.

Reasons

If RBI decides to ban Rs 500 notes, what is the reason behind it? Why is the regulator considering banning the large Rs 500 notes?

Control on black money

The government may ban Rs 500 notes to bring control on black money. It has been observed across the country that whenever the Income Tax Department conducts raids, the bundles of seized notes mainly contain Rs 500 notes. The government and RBI are planning to ban Rs 500 notes to check this corruption. This decision may be taken to deposit black money in banks.

Increase in circulation of small notes

RBI will increase the circulation of small notes. The circulation of Rs 500 notes will be reduced and Rs 100 and Rs 200 notes will be increased in ATMs and banks. Small notes of the same denomination will be printed as the Rs 500 notes are banned.

Encouraging digital payments

The government is also preparing to ban large notes to encourage digital payments. Accepting digital payments will make it possible to identify black money. At the same time, the benefits to the people will also increase.