The Reserve Bank of India (RBI) has relaxed on the weekly withdrawal limits in cases where deposits are made in current legal tender notes. The decision was taken as certain depositors are hesitating to deposit money in view of current limits on cash withdrawals.
The withdrawal limit will increase by the amount of deposits made in accounts in legal currency. The apex bank said, preferably, available higher denominations notes of 2,000 and 500 rupees may be issued for such withdrawals.
The reserve bank announced that the current limits on cash withdrawals of Rs 24,000 was disrupting the circulation of currency notes in the economy. In wake of this situation, the central bank said that, “It has been decided to allow withdrawals of deposits made in current legal tender notes on or after November 29, 2016 beyond current limits.”
Meanwhile, RBI stated that around 60% of the value of the demonetised notes (Rs 14 lakh crore), has already been accounted for. While deposits of the demonetised notes in banks since November 9, when the decision kicked in, total Rs 8.45 lakh crore and notes worth Rs 33,498 crore (3%) have been exchanged.
The total amount of legal tender released since November 9 amounts to Rs 2.50 lakh crore, which is around 18% of the value of the withdrawn notes. Of this, Rs 2.16 lakh crore was withdrawn from banks and ATMs.
There were expectations in the government that old notes worth Rs 3 lakh crore would not return to the banking system. This, it was believed, would result in a fall in the RBI’s liabilities and thus translate into windfall gains for the government. However, if the current pace of deposit accretion continues, the value of the old notes coming back would inch up, and the windfall gains may not be realised.
