RBI spokesperson Alpana Killawala told PTI from Mumbai that the public will not be put to inconvenience by the phasing out, which merely means that these currency notes would not be reissued after they are deposited with banks.
These notes will be replaced with 2006, Mahatma Gandhi series notes, which have more security features, she said.
At present, the RBI is not phasing out any currency notes in smaller denomination -- Rs 10, 20, 50, and 100, a statement issued by RBI said.
The statement further said there is no time limit set for such phasing out or for the public to exchange them.
The central bank has asked banks that when they receive bank notes with old design in Rs 500 denomination (1996 series), they may not re-issue such notes to public and instead return them to the RBI offices.
Members of the public will get the exchange value for the banknote of the old design tendered by them for the same value either in the new design of banknotes or by combination of other denominations or by credit to their account, it said.
All banknotes in the 1996 series will continue to be legal tender and public can continue to use all genuine banknotes, the statement said.
When asked whether these notes are being phased out because of the problem of counterfeiting, Killawala said replacement of old currency notes with new ones is an exercise followed by central banks all over the world.