In a move that will bring relief to small traders and businessmen, the Reserve Bank of India (RBI) on January 16 allowed them to withdrawal cash from current accounts of Rs 1 lakh per week compared with just Rs 50,000 earlier. The facility will be applicable to overdraft and cash credit accounts as well. The availability to withdraw more cash should help small businesses whose cash flows have been squeezed due to the shortage of cash.
The central bank also upped the limit on withdrawals from ATMs to Rs 10,000 per day per card from Rs 4,500 at present. The enhanced withdrawal limit, however, will be operative within the existing overall weekly limit of Rs 24,000, the RBI said.
The central bank stated in a notification that the waiver of transaction charges for services availed at ATMs by savings account holders, which was notified on November 14, would continue.
On November 8, currency notes with denominations of Rs 1,000 and Rs 500 were declared to be not legal tender. The withdrawal of the large value of currency of Rs 15.44 lakh crore hurt not just small companies and businesspeople but also households. The demonetisation process, which required those holding these old currency notes to deposit them in banks or exchange them, was aimed at weeding out black money. An estimated Rs 14.9 lakh crore, however, is believed to have been deposited with banks since November 10.
At the end of November, the central bank had allowed withdrawals beyond the then applicable daily limit of Rs 2,500 and weekly limit of Rs 24,000 from bank accounts.
This was subject to the additional cash withdrawn being equivalent to deposits made in the new Rs 500 and Rs 2,000 notes by the account holder.
Limits on cash withdrawal have been imposed and revised repeatedly by the central bank since the government announced its decision to withdraw legal tender on old Rs 500 and Rs 1,000 currency notes.
Digital transactions have grown significantly in the past two months as a result of the cash crunch resulting from demonetisation.
The aggregate value of transactions made at point-of-sale terminals in December stood at Rs 52,223.84 crore, up from Rs 51,121 crore in October, according to RBI data.
Transactions made through the Unified Payments Interface (UPI) rose to Rs 712.03 crore in December from Rs 90 crore in November, while those made through the Unstructured Supplementary Service Data (USSD) channel jumped to an aggregate of Rs 10.37 crore in December from a little over Rs 73 lakh in November.
The latest relaxation in the withdrawal limit for current accounts is expected to help ease the working capital woes of businesses that rely heavily on cash.
While the index of industrial production (IIP) rose to a 13-month high of 5.7% in November, experts said that the full impact of demonetisation will have played out only in December. “Going by the production trend in some sectors such as autos, next month’s (December) IIP growth data may be more indicative of the impact of demonetisation,” Crisil Research had written last week.
Source: The Financial Express
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