The deadline to swap old 500 rupee and 1,000-rupee bills for new ones ended on December 30.
Highlights
- The weekly withdrawal limit remains unchanged at Rs 24,000
- Ensure that enough new 500-rupee notes are available: RBI to banks
- Old notes can be deposited with RBI till March 31
Prime Minister Narendra Modi will address the country today on New Year's eve which also brings an end to a 50-day period that he had sought to bring normalcy after an abrupt November 8 ban on 500 and 1,000-rupee notes. While the restrictions on cash withdrawal stays on because of a limited cash supply to banks, the daily withdrawal limit from ATMs have been increased from Rs 2,500 to Rs 4,500.
Here are the top 10 developments of the story:
Starting January 1, you can pull out Rs. 4,500 per day per card at ATMs. However, the weekly limit per bank account remains unchanged at Rs. 24,000 as the government tries to replace the outlawed currency with new bills.
The RBI has asked banks to submit details of the deposits made in the outlawed currency. It is estimated that more than 90% of the cancelled notes have been already deposited in banks, which means that the government's intention of removing black money may have missed its mark.
On November 8, PM Modi's shock announcement rendered 86 percent of India's currency void, giving people until Friday to swap their old 500 rupee and 1,000-rupee bills for new ones.
The PM has been widely hailed for his assault on tax evasion but long queues outside banks, a cash crunch and policy flip-flops have led to a concerted attack from the opposition.
Many top industrialists and financial experts have praised the PM's call to move towards a digital economy, but some industries have ground to a halt and laid off staff, highlighting India's huge dependence on cash.
The serpentine queues outside banks have thinned down but a single 2,000-rupee note is still all that most ATMs dispense to customers. The RBI, while easing the restrictions on ATM withdrawals, has asked banks to ensure that the new 500-rupee notes are dispensed from cash machines. So far, these notes have been in very short supply.
Only 35-40 percent of ATM machines are currently dispensing cash, according to Ramaswamy Venkatachalam, managing director, India and South Asia, Fidelity Information Services, a banking technology provider.
Until March 31, old notes can be deposited with the Reserve Bank of India but December 30 was the last opportunity to do so at other banks. After the March deadline there will be a minimum 10,000 rupees penalty for holding old notes.
Economists expect the economy to benefit in the long term due to an increase in tax revenues but only once there is a plentiful supply of those elusive new notes in circulation.
Congress leader and former Finance Minister P Chidambaram today tweeted: "PM asked for forbearance until Dec 30. That is over. Why are restrictions on withdrawing money continuing?"
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