NEW DELHI -- Restrictions on withdrawal of cash from banks and ATMs are likely to continue beyond 30 December as currency printing presses and Reserve Bank of India (RBI) have not been able to keep pace with the demand for new currency notes.
As the 50-day deadline for the 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 ₹24,000 per week due to the cash crunch, and are rationing the valid currency depending on cash availability.
If this limit is withdrawn for individual and businesses from 2 January, it is unlikely that banks would be able to disburse the higher demand for valid currencies given the current cash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"Most of us think that the withdrawal limit would not be completely withdrawn.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 require 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 ₹500 and 1000 notes, the government has fixed a limit of ₹24,000 per week on withdrawal from bank accounts and ₹2,500 per day from ATMs in view of the currency crunch that followed.
The government and RBI have not specified when the restrictions will be withdrawn. Finance Secretary Ashok Lavasa had said the withdrawal cap would be will be reviewed after 30 December.
Even bank unions are also of the opinion that the restrictions cannot be done away with in one go.
In all likelihood the restriction on withdrawal would continue for some more time in the best interest of banks as well as customers at large, said All India Bank Officers' Confederation (AIBOC) General Secretary Harvinder Singh.
The situation of currency supply is known to everyone and it would be difficult to lift the limit from 2 January, Singh said, adding that SME and small businesses are waiting for the cap to go so that they can withdraw as per their requirement.
Reserve Bank of India has infused ₹5.92 lakh crore in the banking system between 9 November and 19 December against ₹15.4 lakh crore of scrapped notes.
According to RBI, banks had got deposits of ₹12.4 lakh crore defunct notes by 10 December.
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