Even as we inch closer to the 30 December deadline to deposit old currency notes of ₹500 and ₹1,000, the government might not lift the cash withdrawal restrictions it has imposed following its decision to demonetise these notes.
According to a report in The Indian Express, banks have cautioned the government against lifting restrictions as there are not enough new currency notes available at banks to meet an unchecked demand in cash withdrawals. However, nothing has been formally suggested to the government by the Indian Banks' Association (IBA), which represents private and state-owned banks, Express reported.
The shortage in new notes is despite the fact that over 90 percent of the demonetised notes have been returned to banks following the 8 November announcement. The Times of India reported that ₹14 lakh crore worth of ₹500 and ₹1,000 notes have been deposited in banks. The total estimated value of the demonetised currency is ₹15.4 lakh crore.
However, the printing of new notes have not kept up with this. Most private and public bank branches have struggled to keep up with providing cash to account holders even within the withdrawal limit. Reports of ATMs running out of cash within hours, and banks deciding their own withdrawal limits per customer have been common. Under the government's directive, every bank account holder can withdraw ₹2,500 per day from ATMs and ₹24,000 a week from bank accounts. Unavailability of the new ₹500 notes have reduced the daily ATM withdrawal limit further to ₹2,000 in many branches, and paucity of new notes in banks has meant that withdrawing your own money is a hit-and-miss exercise.
An Indian Express report quoted RBI data to find that banks across India were able to give account holders only ₹5.92 lakh crore between 10 November and 19 December, which is a little over a third of the value of the notes demonetised by the Modi government.
Earlier, Economic Affairs Secretary Shaktikanta Das had said that at least half of the demonetised currency would be back in circulation by the end of the year. Now it seems likely that this will take longer and cash withdrawal limits will remain in place early next year as well.
The finance ministry has earlier indicated there will be a review after 30 December to decide on withdrawal limits. "There will be a review which will be done after 30 December and whatever steps are required to be taken to bring things back to normalcy, I think they will be decided only after this review is complete," Finance Secretary Ashok Lavasa had said earlier this month.
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