The use of Sh500 notes will come to an end soon.
The Bank of Tanzania (BoT) says it is conducting the final collections from banks for destruction.
BoT has confirmed that the stock of the Sh500 denomination note has been finished. However, the notes will continue to be the legal tender for payments, until they are totally eliminated from the financial markets automatically.
The BoT Currency Department assistant manager, Mr Abdul Dollah, told The Citizen that the central bank is only legally mandated to issue currencies, destroy or withdraw them from the market.
“The central bank is the one which issues currencies through commercial banks and it can withdraw or collect them from the market.” Currently, the circulating Sh500 denomination is in form of both coin and banknote.
The Sh500 coins, which were issued for the first time in 2014, were introduced to replace the banknote. It was earlier planned that the notes would have been phased out within two years.
However, the replacement was triggered by the fact that the Sh500-banknote rate of wear and tear was high; hence it was costly in maintaining it in the circulation.
“This high rate of wear and tear was mainly caused by the banknote having high velocity in circulation and poor handling by the public,”he stressed.
He explained that all banknotes issued by the bank in circulation are of the same quality, which is 100 percent cotton paper-material.
He noted that the low denominations have the tendency of wearing and tearing at a high rate, due to high velocity in circulation, poor handling by members of the public as well as untimely collection by commercial banks.
BoT says has not yet set time limit for Sh500 banknotes to circulate but at the moment because has no stock and hence on not issuing the same anymore.
It has been said that most members of the public using the Sh500 banknote are low-income earners who do not have bank accounts, making it difficult for the banknote to find its way back to BoT.