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Rs500, Rs1,000 notes ban: Key rules changed to mitigate cash crunch

More reactions from political and corporate leaders are coming a week after the Narendra Modi government withdrew Rs500 and Rs1,000 currency notes as part of a crackdown against black money and corruption, queues outside banks and ATMs have only got longer as people look to replace their now-redundant currency notes.

A look at important moves by the government to mitigate the cash crunch as a huge volume of currency notes are taken out of the financial system.

Rashtriya Janata Dal (RJD) chief Lalu Yadav on Monday asked the Prime Minister whether every individual would get the ‘promised’ Rs15 lakh each in their bank accounts after the completion of 50 days as he promised during the 2014 Lok Sabha elections campaign.”It would be considered as ‘fargical strike’ and ‘fake encounter’ of people if they do not get Rs15 lakhs in their accounts after doing all these exercises,” the former Railway Minister was quoted in NDTV.

Manohar Parikkar: “Earlier, there were rates: Rs. 500 for stone pelting (on security forces in Kashmir) and Rs1,000 for doing something else. PM has brought terror funding to zero,” NDTV quotes the defence minister.

State Bank of India’s (SBI) chairman Arundhati Bhattacharya told CNBC-TV18, “the lender (SBI) had seen transactions of around Rs 1 trillion on Sunday. Out of which 80% is deposits. Definitely, people are becoming more comfortable and less panic stricken.”

A Reserve Bank of India notification directed all banks to waive ATM charges on all transactions by savings bank customers until 30 December. There are about two lakh ATMs of different banks across India. Since August 2014, the banks have reduced transactions for savings banks account customers at other banks’ ATMs to three per month in the six metro cities–Delhi, Mumbai, Chennai, Kolkata, Bengaluru, and Hyderabad. The transactions at own bank ATMs too were limited to five per month and anything beyond that is chargeable up to Rs20 along with service tax.

The government has extended the usage of existing Rs500 and Rs1,000 notes for select transactions till 24 Novemberfrom the earlier deadline of 14 November.

The limit of Rs4,000 for over the counter exchange has been increased to Rs4,500. The cash limit of ATMs enhanced to Rs2,500 from Rs2,000.

The weekly cash withdrawal limit from bank accounts ofRs20,000 has been enhanced to Rs24,000. The cash withdrawal limit of Rs10,000 per day has been removed.

The government has also raised the cash withdrawal limit of at least three-month old current accounts to Rs50,000 per week.

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