The government has taken a step back from taking a call on rationing cash supply through various withdrawal limits imposed on customers from bank branches and ATMs, by putting the onus of these decisions on the Reserve Bank of India, through an official notification on Thursday.
Following Prime Minister Narendra Modi’s decision to demonetise high-value currency notes unveiled on November 8, the Ministry had first notified that over-the-counter cash withdrawals would be restricted to Rs.10,000 per day subject to an overall limit of Rs.20,000 per week, which was subsequently raised to Rs.24,000 a week.
Similar restrictions were put on ATM withdrawals and so on.
However, in its latest notification, the Ministry has said that “cash withdrawal from a bank account over the counter shall be such as may be specified by the RBI from time to time" and from ATMs would now be as specified by the RBI.
The notification on Thursday also added that ATMs must ensure that they dispense notes of any denomination as specified by the RBI rather than the earlier requirement that they must dispense notes of Rs.50 and Rs.100 “until further specified.”
The decision to let the RBI take the lead in such decisions comes after several alterations and amendments to the rules by the government over the three-odd weeks since demonetisation.
Following the Finance Ministry announcement about myriad rule changes, the central bank needed to notify the same to enable banks to implement the new withdrawal limits.
For example, the government initially specified the over-the-counter exchange limit for old Rs 500 and Rs 1,000 notes to be Rs 4,000 per person, which was then increased to Rs 4,500 on November 13, subsequently reduced to Rs 2,000 on November 17, following which the exchange facility was completely banned from November 24 midnight onward.
Similarly, the original cash withdrawal limit of Rs 10,000 per day was subsequently removed on November 13, and the weekly limit of Rs 20,000 was hiked to Rs 24,000 per week.
