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Published: Sat, December 31, 2016
Economy | By Melissa Porter

Cash withdrawal limits likely to stay after banned note-deposit deadline ends

Cash withdrawal limits likely to stay after banned note-deposit deadline ends

"This will only turn banks into villains", a private banker had said.

Following demonetisation of old Rs500 and Rs1,000 notes on 8 November, limits had been imposed on withdrawal of cash from banks as well as ATMs. But ATMs of most other banks, including HDFC Bank and SBI, continue to dispense Rs 2000 and Rs 100 notes. Although this week the currency situation has been somewhat better as new Rs 500 notes as well as Rs 100 notes have been in circulation but only some vending machines have started dispensing the notes.

In its direction to banks on ATM withdrawals, the RBI said: "Such disbursal's should predominantly be in the denomination of Rs 500".

Cash withdrawal limit from ATMs will be increased to Rs 4,500 per day from current Rs 2,500.

Friday was the last day to deposit the invalid currency notes in banks. "That will become a problem", a senior executive of the State Bank of India said to The Indian Express.

There is no change in weekly withdrawal limits.

Although the overall situation at banks has improved, ATM's still have to do some catching up.

Bankers have requested the finance ministry to not remove the withdrawal limits completely, given the cash crunch at banks.

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 requires cash in large quantity, the official said, the practical way would be to relax it gradually.

The new limit will be applicable from January 1, 2017.

Reserve Bank of India has infused Rs. 5.92 lakh crore in the banking system between November 9 and December 19 against Rs. 15.4 lakh crore of scrapped notes.

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