Another U-turn by RBI, no explanation required on deposits over Rs 5,000

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In yet another U-turn, the Reserve Bank of India (RBI) on Wednesday decided to withdraw the notification on the deposit of Rs. 5,000 requiring an explanation from the customer.

According to the new notification, banks will not ask any questions on deposits above Rs. 5,000 for fully compliant KYC or Know Your Customer accounts, the RBI said.
U-turn RBI

The RBI circular, signed by one P Vijaya Kumar, the circular read, “Withdrawal of Legal Tender Character of existing ₹ 500/- and ₹ 1000/- Bank Notes (Specified Bank Notes) – Deposit of Specified Bank Notes (SBNs) into bank accounts- Modification.

“Please refer to our circular DCM (Plg) No. 1859/10.27.00/2016-17 dated December 19, 2016. On a review of the above, we advise that the provisions of the above circular at sub para (i) and (ii) will not apply to fully KYC compliant accounts.”

Meanwhile, according to Indian Express, All India Bank Officers Confederation on Wednesday said that the RBI order on cash deposits over Rs 5000 “has messed up whole system.”

It said, “On one hand, general public is feeling cheated, while staff, being clueless about how to implement, are being harassed.”

This after the RBI and the Centre’s Narendra Modi government came of plenty of criticism and ridicule on social media platforms for their new provisions forcing customers to complete explanation forms while depositing over Rs 5,000 in their accounts.

The government on Monday had announced that deposits of old Rs 500 and Rs 1,000 notes worth more than Rs 5,000 into bank accounts can be made only once till 30 December.

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