Analysts predicted that this measure could increase bank deposits at a time of rapid credit growth.
The top officer of the finance ministry, who authorised the withdrawal of 2,000 rupee ($24.5) notes,
Also occurs prior to national elections in spring 2024 as well as elections in four sizable states at the end of the year.
The majority of Indian political parties are thought to store large amounts of cash to avoid the strict spending restrictions imposed by the Election Commission.
It also stated that the notes would continue to be valid tender, but that they would need to be deposited and exchanged for lesser amounts by September 30.