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Demonetisation: Cash crunch continues, Govt. moves to ease situation

 
India seeks to quell public anger by raising bank cash withdrawal
As thousands of people queued up outside banks in cities and towns across India for the fifth day today to withdraw cash, after the sudden demonetisation of Rs. 500 and Rs. 1000 notes on November 8, the Government has announced a series of measures to ease the crisis and allay fears among the public.
 
Among other thing, the Government has increased the limit for exchange of the old notes at banks and post offices from Rs. 4000 to Rs. 4500.
 
With banks closed in parts of North India today and many ATMs still not functional yet because they are awaiting recalibration, people continued to face difficulties with regard to availability of cash in hand for daily necessities, leading to anger and frustration among those in the queues at several places.
 
Prime Minister Narendra Modi reviewed the situation regarding the supply and availability of currency notes at a high-level meeting here late last night, following which the Government announced various decisions to  further activate the dispensing of cash through the networks of Banking Correspondents (BCs), Post Offices, ATMs, Banks and E-payment systems 
 
The meeting, which went on well past midnight, was attended by, among others, Home Minister Rajnath Singh, Finance Minister Arun Jaitley, Urban Development and Information & Broadcasting Minister M. Venkaiah Naidu and Coal and Power Minister Piyush Goyal.
 
The Governor of the Reserve Bank of India, all Secretaries of the Ministry of Finance and senior officials from the Prime Minister's Office were also present.
 
An official press release said banks would increase the cash holding limit of BCs to at least Rs.50,000 each.  Banks will also allow higher limits in appropriate cases. Banks will replenish the cash with BCs multiple times in a day as per requirement of the BCs. BCs have wide presence in the rural areas.  Totally there are 1.2 lakh BCs in the country. 
 
These decisions are expected to facilitate wider reach in the rural areas for exchange and withdrawal of cash from bank accounts.
 
The Government also decided to enhance the supply of cash to the 1.3 lakh Branch Post Offices in the country to facilitate cash withdrawals from Postal Accounts.
 
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With 1.2 lakh BCs and 1.3 lakh branch Post Offices getting further activated, a total number of 2.5 lakh points in rural areas will be available to disburse cash and facilitate cash withdrawals from bank accounts, the release said.
 
To expedite the process of recalibration of ATMs, a Task Force is being set up under Deputy Governor, RBI consisting of representatives of banks and the Finance Ministry.  This Task Force will draw up an action plan and ensure its implementation for quick recalibration of the ATMs to enable them to dispense new bank notes of Rs. 500 and Rs. 2000.
 
In the meantime, Micro ATMs will be deployed to dispense cash against Debit/Credit cards up to the cash limits applicable for ATMs.  The handheld Micro ATMs have the facility of mobility and deployment at the required places. 
 
The withdrawal limit of Rs. 20,000 per week has been enhanced to Rs. 24,000.  The withdrawal limit of Rs. 10,000 per day has been removed.
 
The limit of Rs.4000 for over the counter exchange against old Rs. 500 and Rs. 1000 notes has been increased to Rs. 4500.  This will enable the banks to give lower denomination notes for Rs. 500 while dispensing the remaining Rs. 4000 through Rs. 2000 notes.
 
The ATMs are progressively getting recalibrated.  As and when they are recalibrated, the cash limit of such ATMs will stand enhanced to Rs. 2500  per withdrawal.  This will enable dispensing of lower denomination currency notes for about Rs.500 per withdrawal.  Other ATMs which are yet to be recalibrated, will continue to dispense Rs. 2000 till they are recalibrated. 
 
Business entities having Current Accounts which are operational for last three months or more will be allowed to draw Rs. 50,000 per week.  This can be done in a single transaction or multiple transactions.  This will enable the small business entities to pay wages to their workers and make sundry payments.
 
Adequate cash will be made available with District Central Cooperative Banks (DCCBs) to facilitate withdrawal from existing accounts.  The cash withdrawal limits for Banks will apply in case of DCCBs also.
 
These measures would substantially enhance the reach of the banking system to exchange notes and facilitate cash withdrawal from bank accounts, the release said.
 
All Central Government Departments and Public Sector Enterprises are being instructed to use the method of e-payments to the maximum extent possible.
 
RBI has advised National Payments Corporation of India (NPCI) to waive its transaction charges on transactions settled through National Financial Switch(NFS) till 31st December, 2016. Banks are also being advised to waive similar charges currently levied by them.
 
The release said banks had been advised to arrange separate queues in their branches for senior citizens and divyang persons; customers for transactions against accounts held with the bank; and exchange of notes.  There will, therefore be, three or more separate queues in every branch.
 
Pensioners are required to submit Annual Life Certificate during the month of November.  This time limit has been extended up to 15th January, 2017.
 
The existing exemptions for acceptance of old Rs. 500 and Rs. 1000 notes for certain types of transactions are being extended beyond 14th November, 2016 midnight up to 24th November, 2016 mid night.
 
"There is enough cash in the system to meet the requirement.  Members of the public are, therefore, advised not to have any sense of panic," the release added.
 
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