RBI To Stop Rs 500 Notes In ATMs? Here’s What Govt Said

Fake WhatsApp Rumour Sparks Panic, Govt Breaks Silence

Can a simple WhatsApp message shake public trust in currency? That’s exactly what happened last week when a forwarded message claimed the ₹500 note would soon vanish from ATM machines across India.

In June 2025, social media platforms saw a rise in posts warning that the Reserve Bank of India (RBI) had allegedly instructed all banks to stop the use of ₹500 notes in ATMs by September 30, 2025. The claim also mentioned a final deadline of March 31, 2026, for nearly all ATMs to stop dispensing this denomination. The story triggered confusion and speculation, drawing comparisons to the sudden demonetisation of 2016.

But in reality, the RBI has issued no such instruction.

The Truth: Government Clarifies, ₹500 Notes Are Not Being Stopped

On July 14, 2025, the Press Information Bureau (PIB) issued a statement confirming that no circular or advisory had been issued by the RBI to stop ₹500 notes in ATMs. The fake claim had been from a widely viewed YouTube video that falsely interpreted an actual RBI guideline aimed at improving access to smaller denominations.

PIB’s fact-check division called the message “completely false” and reminded the public that ₹500 notes are legal tender and remain valid in all financial transactions.

A closer look at the RBI’s official instructions reveals a different focus. In a circular dated April 1, 2025, the Reserve Bank directed banks and White Label ATM Operators (WLAOs) to increase the availability of ₹100 and ₹200 notes in ATMs. The circular mentioned compliance targets for September 2025 and March 2026 but did not instruct banks to withdraw ₹500 notes.
 

This clarification puts the misleading viral claims to rest, but the original circular still signals a shift in how cash is distributed at the ATM level. Here's what the RBI really meant.

Read More – How to Take Money from an ATM – Beginner’s Guide to Cash Withdrawal

What RBI Actually Ordered in April 2025 Circular

The RBI circular titled "Enhancement of Banknote Dispensation at ATMs" instructed that at least one cassette in 75% of ATMs should dispense either ₹100 or ₹200 notes by September 30, 2025. This percentage must increase to 90% by March 31, 2026. The aim is to make smaller denominations more accessible, particularly in semi-urban and rural areas.

The move follows increasing complaints from citizens, especially in rural belts, about the unavailability of change during daily transactions. Bigger notes like ₹500 often cause issues in local markets, kirana stores and even in public transport.

The table below outlines the official RBI targets set for ATM operators.
 

The purpose is clear. RBI wants to make it easier for citizens to receive lower denomination notes without affecting the circulation or availability of higher-value currency like ₹500.

Here's why ₹500 notes are far from being pulled back.

Circulation Facts: ₹500 Note Still Dominates

According to the RBI Annual Report 2024–25, ₹500 notes make up 40.9% of the total currency in circulation by volume and about 86% by value. This dominance shows how widely used the ₹500 note is in the economy.

These figures make it illogical to consider removing this denomination without major disruption to cash-based sectors. Most ATMs across India currently dispense ₹500 notes as they occupy less space and cost less in logistics.

The following table shows how various denominations are used in the Indian market.
 

This data helps explain why such rumors can impact financial confidence. Public memory of demonetisation still lingers, so even a misinterpreted video or viral message can stir unease.

Also Read - Major Update: 73% ATMs Now Dispense ₹100 & ₹200 Notes Before RBI’s Deadline Hits

Where the Fake News Started

The source of the rumour has been traced to a YouTube channel named Capital TV, where a video wrongly stated that ₹500 notes would soon be withdrawn from circulation. The video was widely shared across platforms including Facebook, WhatsApp, and Telegram.

Following the panic, PIB Fact Check published screenshots of the video and clarified the misinformation publicly. The video, however, had already gained thousands of views, raising questions about digital media responsibility.

Here is a brief of what triggered the confusion:
 

The central bank has not taken action against the source as yet, but digital literacy experts are calling for stronger regulations against financial misinformation.

Conclusion 

As the RBI circular's compliance deadlines near, banks are busy updating their ATMs. ₹500 notes, however, will still be available as usual. The goal is to increase the circulation of smaller denominations, not phase out higher ones.

If you're unsure about any currency updates, stick to trusted sources like rbi.org.in or PIB’s official channels.

While the RBI’s new ATM rules bring some changes, they don’t eliminate ₹500 notes. These notes will likely continue playing a major role in India’s cash economy for years ahead.
 

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