In a press release issued on Monday, the central bank also told banks to exchange the old notes for full value.
"This withdrawal exercise is in conformity with the standard international practice of not having multiple series of notes in circulation at the same time. A majority of such notes have already been withdrawn through the banks and only a limited number of notes remain with the public," RBI said.
The central bank also clarified that all such notes continue to remain legal tender and people can continue to freely use these notes for any transaction and receive them in payment. These notes can be identified because they do not have the year of printing on the reverse.
In its earlier circular issued in January 2014, RBI had said after July 1, 2014, exchange of more than 10 pieces of Rs 500 and Rs 1,000 notes would not be allowed at a bank where you are not the customer, unless you furnish proof of identity and residence. But now this deadline has been extended.
According to the RBI's Annual Report, around 14.1 billion pieces of soiled bank notes were processed and removed from circulation during 2012-13. The number of bank notes withdrawn from circulation and eventually disposed off at the RBI offices increased over the previous year by 358 million pieces. During 2012-13, around 8.97 billion pieces were processed through 59 Currency Verification and Processing Systems and the remainder were disposed off under other modes.