No respite on cash withdrawals even after 50 day deadline

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The Reserve Bank of India on Friday announced a marginal increase in withdrawal limit of cash from ATMs even after the expiry of 50-day deadline of demonetisation as promised by Prime Minister Narendra Modi.

According to a PTI report, the RBI increased the cash withdrawal limit from ATMs to Rs 4,500 from Rs 2,500, effective 1 January.

cash withdrawals

However, there has been no change in the weekly withdrawal limit, which stands at Rs 24,000, including from ATM, for individuals (Rs 50,000 in case of small traders).

“On a review of the position, the daily limit of withdrawal from ATMs has been increased (within the overall weekly limits specified) with effect from January 1, 2017, from the existing Rs 2,500 to Rs 4,500 per day per card,” the central bank said in a notification.

Following demonetisation of old Rs 500/1000 notes on November 9, limits had been imposed on withdrawal of cash from banks as well as ATMs.

The Reserve Bank’s notification further stated “there is no change in weekly withdrawal limits” and such disbursals “should predominantly be in the denomination of Rs 500”.

Earlier in the day, the RBI had permitted White Label ATM Operators (WLAOs) to source cash from retail outlets.

Most of the White Label ATMs are running dry since demonetisation as the operators were facing difficulties in sourcing cash from their sponsor bank(s).

Today was the last day to deposit the invalid currency notes in banks. However, people still have time to exchange the currency notes at designated RBI counters till March 31 after giving valid reasons for not depositing defunct notes in their accounts by December 30.

The new announcement by the RBI established what many feared that despite Prime Modi’s assurances, normalcy may not return in an individual’s ability to freely withdraw his/her own deposited cash.

The announcement also came just when the 50-day deadline to deposit the junked Rs 500/1,000 notes in banks came to an end.

The clarity still eludes on whether the weekly withdrawal limit of Rs 24,000 would be eased or not.

Even on the last day of the 50-day window, queues were seen at bank branches and ATMs.

Finance Minister Arun Jaitley said that RBI has enough currency and situation of cash supply has improved significantly.

Asked when curbs on withdrawal would be removed, Jaitley said when the decision will be taken, it will be made public.

People still have time to exchange the currency notes at designated RBI counters till March 31 after giving valid reasons for not depositing defunct notes in their accounts by December 30.

The government has come out with an ordinance making possession of old Rs 500/1,000 notes beyond a specified limit for numismatic purposes illegal and punishable.

Prime Minister Narendra Modi in a surprise announcement on November 8 declared the Rs 500 and 1,000 notes invalid.

The banks started accepting deposits in scrapped notes from November 10. However, very few ATMs opened on November 11, as most of the machines had to be recalibrated for dispensing the new Rs 2,000 and Rs 500 notes.

Saddled with cash crunch, banks resorted to rationing of valid currency notes. Even on the last day, few banks were rationing Rs 5,000 per person against the withdrawal limit of Rs 24,000 per account in a week.

Although the overall situation at banks has improved, ATMs still have to do some catching up. Many cash vending machines are still out of cash.

Bankers believe that restrictions on withdrawal of cash from banks and ATMs are likely to continue beyond December 30.

The government and the RBI has not specified when the restrictions will be withdrawn. Finance Secretary Ashok Lavasa had said the withdrawal cap would be reviewed after December 30.

(With PTI inputs)

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