Modest hike in cash limits

TT,New Delhi, Nov. 13: The Centre tonight announced steps to raise cash withdrawal limits modestly and address growing anger after a review, which appeared to have been brought forward at a time the banking system is groaning under the weight of long queues and note-less ATMs.

The cash withdrawal limit against cheques has been raised to Rs 24,000 a week while the daily cap of Rs 10,000 has been scrapped. The government has ordered banks to allow customers to exchange Rs 4,500 against the demonetised notes, raising the earlier limit by Rs 500. ( See chart)

Banks have also been advised to increase the cash withdrawal limit at their recalibrated ATMs to Rs 2,500 from Rs 2,000 per day.

A government note did not specify whether the hike would apply to non-recalibrated machines too, merely saying that "other ATMs" would continue to dispense Rs 100 and Rs 50 notes until they were recalibrated.

The suggestion seems to be that the recalibrated ATMs would dispense the new Rs 500 notes that were issued in Delhi and Mumbai today and are expected to reach other state capitals in a few days.

On Saturday, finance minister Arun Jaitley had said it might take up to two to three weeks to recalibrate the 2.18 lakh ATM machines across the country.

The government appeared to be aware of the resentment building up among the public and sought to address some concerns.

It extended the date for pensioners' submission of life certificates till January 15 next year to ease their pain at a time when besieged bank branches are struggling to conduct any other business. Amid reports of patients being turned back and weddings being postponed, the government warned hospitals, caterers and tent houses of local-level action if they declined cashless payments.

The government note said banks had been advised to increase the business correspondents' limit to Rs 2,500 for withdrawal from bank accounts. Business correspondents are critical to the disbursal of money in rural areas, especially that sent by migrant labourers to their families in the hinterland where the banking system is either sparse or non-existent.

In the late-night note, the Centre said the limits were being raised after the finance ministry "reviewed the position regarding availability and distribution of all denomination of bank notes".

This is the first review of the monetary limits since the November 8 notification on demonetisation. At that time, the government said it would review the limits after 15 days, or by November 24.

The decision to review the limits sooner was prompted by the growing restiveness across the country, with bank customers increasingly frustrated by the long queues and the inadequate stock of currency in the branches to deal with the rush.

Within four days, Rs 3 lakh crore of demonetised notes have been deposited with banks and Rs 50,000 crore dispensed to bank customers through cheques, ATM withdrawals and exchange of notes.

Asked to comment on the modest increase in cash withdrawal limits, officials in the finance ministry said: "The situation will be reviewed and appropriate action taken."

The note said the banks had been advised to ensure the availability and distribution of small denomination notes. Reports from the ground suggest that most banks are now distributing the new Rs 2,000 notes.