Cash curbs to go on March 13-cash withdrawals up to Rs 50,000 a week from February 20

TT, Mumbai, Feb. 8: Savings bank account holders will be able to make cash withdrawals of up to Rs 50,000 a week from February 20 - a substantial increase from the current limit of Rs 24,000.

The RBI, which adopted a hawkish stand today by deciding not to cut interest rates, said all restrictions would disappear from March 13.

The "final numbers" on the value of the old notes that were deposited will be divulged only after June 30, the last day till when non-resident Indians have time to deposit the recalled currency.

RBI deputy governor R. Gandhi told reporters after the release of the monetary policy statement that the cash withdrawal limits were being relaxed because the pace of remonetisation had picked up after the November 8 surgical strike that vaporised 86 per cent of the currency in circulation.

Gandhi said the currency in circulation had swelled to Rs 9.92 lakh crore as of January 27 but it's still a far cry from the level of around Rs 17.6 lakh crore in early November.

The central bank has been gradually easing cash withdrawal restrictions. Late last month, it had removed the restrictions on cash withdrawal from current accounts and cash credit accounts.

Though the RBI had removed curbs on withdrawal through ATMs with effect from February 1, the weekly withdrawal limit of Rs 24,000 on savings bank accounts continued.

Banking analysts welcomed the RBI move but said its success would critically depend on the available note denominations.

"The relaxation will lead to a surge in cash-based transactions across ATMs and banks, bringing buoyancy back in the economy. However, the availability of denominations will be crucial in determining the success of this move, restoring the day-to-day lives of the consumers," said Ravi Goyal, chairman and managing Director of AGS Transact Technologies.

The November 8 demonetisation announcement had triggered a deluge of deposits into the banking system. The big question now is how much of these deposits will remain with the banks which are expected to trim deposit rates further as they come under pressure from the RBI to lower lending rates.

SBI chief Arundhati Bhattacharya had earlier said that close to 30 per cent of these deposits could remain within the banking system. Others expect 40 to 50 per cent of these deposits to stay with banks.

Banks are hoping to retain access to this cheap trove of cash - on which they pay very low interest rates - which will make it easier for them to cut lending rates.

Gandhi said the RBI was still reconciling deposit data to get a fix on how much of the old Rs 500 and Rs 1,000 currency notes had flowed back into the system till December 30, the date till when banks had teller counters open for the deposit of demonetised notes.

Deputy governor S.S. Mundra said that the final numbers could only be revealed after counting the notes deposited in cooperative banks, receipt of information from Nepal and Bhutan and the closure of the window for deposit of notes by NRIs.

"After adding all these, we will give out the number (of notes deposited). But the final numbers and piece-to-piece verification of the huge volume of currency that has come in will take time," Mundra said.

"There are 4,000 currency chests in the country. RBI keeps currency in 19 places. After December 30, we had asked all banks to run their calculations on the notes they had received. An RBI team also carried out a centralised check. That procedure is over. Reconciliation is going on with regard to physical cash. We hope to complete this process in sometime," he added.