Restrictions On Cash Withdrawals May Continue Beyond December 30

Restrictions on withdrawal of cash from banks and ATMs are likely to continue beyond December 30 as currency printing presses and the Reserve Bank of India (RBI) have not been able to keep pace with the demand for new currency notes.

As the 50-day deadline for completion of demonetisation process draws near, there is a growing consensus among bankers that the restrictions on withdrawal would have to continue even in the New Year to maintain orderly working of banks.

Banks at many places are not in a position to disburse even the current limit of Rs24,000 (Dh1,299) per week due to the cash crunch and are rationing valid currency depending on availability.

If this limit is withdrawn for individual and businesses from January 2, it is unlikely that banks would be able to manage the demand.

“Most of us think that the withdrawal limit would not be completely withdrawn. It is a possibility that it could be relaxed if the cash situation improves,” said a senior public sector bank official.

At a time when banks are struggling to meet the demand of individual customers, it would be impossible to service MSME (Ministry of Micro Small and Medium Enterprises) and big corporates which requires cash in large quantity, the official said. The practical way would be to relax it gradually.

Recently, State Bank of India (SBI) Chairperson Arundhati Bhattacharya had also indicated that restriction on withdrawals cannot be lifted entirely unless more cash is made available to banks.

After the demonetisation of Rs500 and Rs1,000 notes, the government had fixed a limit of Rs24,000 per week on withdrawal from bank accounts and Rs2,500 per day from ATMs in view of the currency crunch that followed.

The government and RBI has not specified when the restrictions will be withdrawn.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

Bank unions are also of the opinion that the restrictions cannot be done away with in one go.

In all likelihood the restriction on withdrawal would continue for some more time in the best interest of banks as well as customers at large, said All India Bank Officers’ Confederation (AIBOC) General Secretary Harvinder Singh.

The situation of currency supply is known to everyone and it would be difficult to lift the limit from January 2, Singh said, adding that small-and-medium-sized enterprises and small businesses are waiting for the cap to be removed so that they can withdraw money as per their requirements.

RBI infused Rs5.92 lakh crore [Rs5,920 billion] in the banking system between November 9 and December 19 against Rs15.4 lakh crore [Rs15,400 billion] of scrapped notes.

According to RBI, banks had got deposits of Rs12.4 lakh crore [Rs12,400 billion] in defunct notes by December 10.

source : gulfnews