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Demonetisation: ‘Review of withdrawal cap after Dec 30’

The finance ministry plans to inject at least 50 per cent worth of new currency to replace the amount of old notes of Rs 500 and Rs 1,000 that will be deposited in the banking system by Dec 30.

By: ENS Economic Bureau | New Delhi |
December 17, 2016 1:22:37 am
demonetisation, demonetisation effects, demonetisation impact, banks, RBI, Baks withdrawal, currency demonetisation, ATm, ATM queues, bank queues, Rs 500, 1000 notes ban, old currency notes, demonetisation december 30, narendra Modi, Modi, PM Modi demonetisation, business news, indian express news The RBI has already lowered its economic growth forecast for current financial year to 7.1 per cent from earlier 7.6 per cent mainly on account of the cash crunch after the decision to scrap high-denomination currency notes. (File photo)

The limits on withdrawal from bank accounts imposed after the scrapping of old series high-denomination notes will be reviewed after the window to deposit old currency notes closes on December 30.  “There will be a review which will be done after December 30 and whatever steps are required to be taken to bring things back to normalcy, I think they will be decided only after this review is complete,” Finance Secretary Ashok Lavasa said at a FICCI event here.

After the November 8 announcement by Prime Minister Narendra Modi to withdraw old series Rs 500 and Rs 1,000 currency notes, the government and the Reserve Bank of India (RBI) had imposed a cap of Rs 24,000 per week on withdrawal from bank accounts and Rs 2,500 per day from ATMs for each individual.

When asked about the possible impact of currency withdrawal on economic growth, the finance secretary admitted that informal sector which mostly deals in cash is facing problem and an assessment will be made of the same after December 30.

“Going forward as the period of December 30 ends, a very calm assessment has to be made on what kind of impact has happened,” Lavasa said.

The RBI has already lowered its economic growth forecast for current financial year to 7.1 per cent from earlier 7.6 per cent mainly on account of the cash crunch after the decision to scrap high-denomination currency notes. On Thursday, when Economic Affairs Secretary Shaktikanta Das had also said that whether the government will lift restrictions on cash withdrawals from ATMs and bank accounts will be known only after December 30. When asked about lifting restrictions on cash withdrawals, Das had said: “You see what the government will do on December 31 or immediately after December 30; I will not be able to say now. You will know on December 30 obviously we have been communicating so we will continue to communicate.”

The finance ministry plans to inject at least 50 per cent worth of new currency to replace the amount of old notes of Rs 500 and Rs 1000 that will be deposited in the banking system by December 30. He had also said that the Reserve Bank of India has already supplied over Rs 5 lakh crore worth of currency to the markets so far and the government expects the situation to improve going forward with focus now shifting on supplying more of Rs 500 notes.

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