Curbs on withdrawal of cash lifted

Restrictions on cash withdrawals, which came into effect from November 9, 2016, following the ban on high-value currency notes, were lifted on Monday

March 13, 2017 11:22 pm | Updated 11:22 pm IST - Mumbai

While the limits on current accounts were lifted earlier, restrictions on savings account deposits were lifted from Monday.

While the limits on current accounts were lifted earlier, restrictions on savings account deposits were lifted from Monday.

Restrictions on cash withdrawals, which came into effect from November 9, 2016, following the ban on high-value currency notes, were lifted on Monday. The RBI announced the easing of curbs during its bimonthly monetary policy review on February 8.

While the limits on current accounts were lifted earlier, restrictions on savings account deposits were lifted from Monday. Though there will be no limit on cash withdrawals, currency in circulation is still far below the pre-November 8, 2016, levels.

Following the decision to withdraw the legal tender status of Rs. 500 and Rs. 1000 notes, 86.9% of the currency in circulation was rendered invalid, amounting Rs. 5.4 lakh crore.

According to Reserve Bank of India data, the currency in circulation till the week ended March 3 was Rs. 11,984.1 billion which is 67% of the currency in circulation, pre-demonetisation. The decision to withdraw high value notes was aimed at eliminating corruption, black money, counterfeit currency and terror funding. According to a recent study by the RBI staff in the monetary policy department, about 78% of all consumer payments in India are effected in cash.

“It was, therefore, obvious that currency squeeze during the demonetisation period would have had some adverse impact on economic activity, although such impact was expected to be transient,” the study observed.

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