No limit on withdrawals if amount deposited in non-demonetized notes from Nov 29
The Reserve Bank of India (RBI) on Monday allowed individuals to withdraw over Rs 24,000 from banks as long as the money was deposited in non-demonetized notes, a move aimed at encouraging people to deposit valid currency notes.
Since November 9, when the Rs 500 and Rs 1000 notes were demonetized, the inflow of new notes of Rs 2000 and Rs 500 or existing Rs 100 and Rs 50 notes in the form of bank deposits has gone down due to the existing withdrawal limits.
The weekly limit of Rs 24,000 was imposed on individual accounts to ensure there is adequate circulation in market and discourage people from trying to convert other’s black money by depositing it in their account and subsequently withdrawing.
However, the move has had an adverse impact on small businesses, who have simply refrained from depositing newly earned cash for the fear of locking it in.
Taking cognizance of the situation, the RBI has now said that people depositing money in legal tender (not the demonetized notes) on or after November 29 will be allowed to withdraw the equivalent amount without any restrictions.
“It has been decided, on careful consideration, to allow withdrawals of deposits made in current legal tender notes on or after November 29, 2016 beyond the current limits,” the RBI said in a statement.
For example, if a person deposits valid legal tenders (Rs 2,000, Rs 500, Rs 100, Rs 50, Rs 20, Rs 10, Rs 5) of Rs 10,000, the withdrawal limit for that person would rise by Rs 10,000 over and above the weekly withdrawal limit of Rs 24,000.
The withdrawals could be preferably permitted in “available higher denominations notes of Rs.2,000 and Rs.500,” it added.
“It has been reported that certain depositors are hesitating to deposit their monies into bank accounts in view of the current limits on cash withdrawals from accounts,” the RBI said, explaining its decision.
Two weeks back, the RBI had also instructed banks to maintain a customer-wise record of deposits done in old notes and the valid notes.
On a separate note, the RBI said that Rs 8.1 lakh crore had been deposited in banks since demonetization, while Rs 34,000 was exchanged and Rs 2.16 lakh crore was withdrawn.