Restrictions on cash withdrawals may continue beyond December 30

Restrictions on cash withdrawals may continue beyond December 30

HIGHLIGHTS

• RBI, Currency printing presses have not been able to keep pace with demand of new notes.
• Banks are not in a position to disburse even current limit of Rs 24,000 per week.
• Finance Secretary had said withdrawal cap would be will be reviewed after December 30.

NEW DELHI: Restrictions on withdrawal of cash from banks and ATMs are likely to continue beyond December 30 as currency printing presses and RBI have not been able to keep pace with the demand of new currency notes.

As the 50-day deadline for completion of demonetisation+ process draws near, there is a growing consensus among bankers that the restrictions on withdrawal would have to continue even in the New Year so as to maintain orderly working at the banks.

Banks at many places are not in a position to disburse even the current limit of Rs 24,000 per week due to cash crunch and are rationing the valid currency depending on cash availability.

If this limit is withdrawn for individual and businesses from January 2, it is unlikely that banks would be able to disburse the higher demand for valid currencies given the current cash position.

"Most of us think that the withdrawal limit would not be completely withdrawn. It is a possibility that it could be relaxed if the cash situation improves," said a senior public sector bank official.

At a time when banks are struggling to meet the demand of individual customers, it would be impossible to service MSME and big corporates which requires cash in large quantity, the official said, the practical way would be to relax it gradually.

Recently, SBI Chairperson Arundhati Bhattacharya had also indicated that restriction on withdrawals cannot be lifted entirely unless more cash is made available to banks.

After the demonetisation of high value Rs 500/1000 notes, the government has fixed a limit of Rs 24,000 per week on withdrawal from bank accounts and Rs 2,500 per day from ATMs in view of the currency crunch that followed.

The government and RBI has not specified when the restrictions will be withdrawn. Finance Secretary Ashok Lavasa had said the withdrawal cap would be will be reviewed after December 30.