Will ₹500 Notes Be Discontinued? RBI Clears the Air
The focus keyphrase “₹500 notes not withdrawn” has dominated financial news after public speculation. But the Ministry of Finance has now clarified that ₹500 notes will continue in circulation. The clarification came in response to a Rajya Sabha question, putting to rest all rumours about a possible demonetisation move.
However, the Reserve Bank of India (RBI) is shifting focus toward greater access to smaller denominations—especially ₹100 and ₹200 notes—at ATMs across India.
RBI Guidelines on ATM Currency Mix
To improve availability of smaller denominations, RBI has issued strict targets to all banks and White Label ATM Operators:
| Timeline | ATM Requirement |
|---|---|
| By 30 Sept 2025 | Minimum 75% of ATMs must be capable of dispensing ₹100 and ₹200 notes |
| By 31 Mar 2026 | This increases to 90% of all ATMs across India |
| Applies To | All commercial banks and White Label ATM operators |
| Issued Under | Circular by RBI’s Department of Currency Management dated 5 July 2024 |
This move is part of a broader effort to ensure ease of daily transactions and reduce public inconvenience, especially in rural and semi-urban areas.
₹500 Notes Not Withdrawn – Official Clarification
Here’s what the Ministry of Finance told the Rajya Sabha:
“There is no proposal to withdraw ₹500 notes. The ₹500 denomination is widely used and remains legal tender alongside ₹100 and ₹200 notes.”
✅ This clarification is critical as it counters misinformation on social media and elsewhere.
What This Means for Banks and Consumers
For Banks & ATM Operators
- Compliance Check: Must reconfigure ATM cassettes to dispense lower denominations
- Cost Impact: Logistics, software upgrades, and storage of more ₹100/₹200 notes
- RBI Monitoring: Non-compliance can lead to regulatory scrutiny
For Consumers
- Easier Access to Change: Especially useful for auto fares, kirana shops, and rural users
- No Panic Needed: ₹500 notes remain valid and usable as always
Expert View: Why This Shift Matters
According to banking experts, smaller denominations reduce the friction in cash-based transactions. Most public complaints about ATMs have involved only ₹500 or ₹2000 notes being available—even for small withdrawals.
“This change is about better user experience, not currency replacement,” says an ex-RBI advisor.
By pushing banks to dispense more ₹100/₹200 notes, RBI is nudging the system toward inclusive banking—without disrupting the ₹500 note.
Key Takeaways
- ₹500 notes remain in circulation and are not being withdrawn
- RBI wants to ensure better availability of ₹100/₹200 notes at ATMs
- 75% of ATMs must dispense smaller notes by Sept 2025, 90% by Mar 2026
- Banks need to reconfigure ATMs to comply
- No change in the legal tender status of any existing note
Related Read
- How RBI Regulates Currency Circulation (External link)
- RBI Circular on ATM Cassette Reconfiguration – July 2024
Summary
The Government clarified that ₹500 notes are not being withdrawn. RBI, however, has mandated all ATMs to ensure wider availability of ₹100 and ₹200 notes by March 2026 for better cash access.
FAQs
Q1. Are ₹500 notes being discontinued?
No. The Ministry of Finance confirmed that ₹500 notes will continue as legal tender.
Q2. Why is RBI focusing on ₹100 and ₹200 notes?
To ensure easier public access to smaller denominations and address cash transaction needs.
Q3. Do I need to exchange ₹500 notes?
No. There is no requirement to exchange them—they remain valid and usable.
Q4. Will ATMs stop giving ₹500 notes?
No. But banks must ensure that most ATMs also give ₹100 and ₹200 notes.