The government relaxed cash withdrawal forms from banks on Monday in a bid to help the rural poor and small businesses that are hit the hardest following a surprise decision last week to withdraw high-value banknotes.
Economic affairs secretary Shaktikanta Das said businesses with current accounts active for three months can withdraw Rs 50,000 every week.
This may come as a lifeline for numerous traders whose businesses stalled because of a cash crunch after the Centre pulled Rs 500 and Rs 2000 notes out of circulation last Tuesday to stamp out illegal cash from the economy.
“Cash supply would be enhanced to branch post offices so that they’re able to give money to account holders,” he said.
ATMs will start dispensing new Rs 500 and Rs 2000 notes – which will replace the old currency – by Tuesday, he said. All decisions were taken in a post-midnight meeting on Monday chaired by Prime Minister Narendra Modi.
Das said an upgraded daily limit of ATM cash withdrawals – Rs 2,500 from Rs 2,000 – will apply to only re-calibrated machines.
The process of updating ATMs to dispense the new currency – which comes in a fresh design and size – is expected to take up to three weeks.
Separate queues will be formed for the disabled and elderly and those who only want to exchange cash.
Banking correspondents – a 130,000-strong informal network of agents who help bridge the last-mile connectivity between banks and villages – will be allowed multiple withdrawals a day, with an individual transaction limit of Rs 50,000. “The transaction limit can be upped by banks when necessary,” Das said.
The secretary’s press conference was aimed at tackling the chaos unleashed by the abrupt demonetisation move with millions of people across India queued in front of banks and ATMs for hours. Many areas have seen ATMs quickly run out of cash with traders, housewives and the poor in distress because of a cash crunch.
Two task forces have been formed to address the situation, one under the RBI deputy governor that will coordinate with banks and ensure adequate cash flow in the economy. The another committee is a team of seven including secretaries and joint secretaries of the finance ministry. Their focus is to monitor the situation in rural areas and the team is in constant touch with principal secretaries of all states.
Nearly 86% of the value of currency in circulation was held in Rs 500 and Rs 1000 notes – and the savings of many people have been hit. But the government has sought to soothe nerves, saying people have till December 30 to deposit their cash.
Das said micro-ATMs will be introduced to dispense cash through debit and credit cards. Petrol pumps, pharmacies, water, electricity utilities will accept old notes until November 24, he added.
The secretary also lauded the banking system for their efforts, saying nearly 180 million transactions have been conducted since Prime Minister Narendra Modi’s announcement last Tuesday.
Source:- Hindustan Times.
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