Thursday, November 17, 2016

Brief of announcements by the government since the demonetisation for withdrawal limit

In the wake of economic reform, Prime Minister Narendra Modi on the evening of November 8 announced that Rs 500 and Rs 1,000 notes would no longer be legal tender. there came many subsequent announcements over how the process would actually work.

The government is relentlessly facing ridiculous criticism by the opposition for the demonetisation of indian currency during the wedding & Rabi cropping season.

Below is the brief of major announcements by the government since the demonetisation announcement to deal with the situation. 

1. Banks were closed on November 9, while the ATMs were shut on November 9 and 10.

2. The first withdrawal limit was set at Rs 2,000 a day for each account.

3. ATM withdrawal limit was set at Rs 2,000 per day.

4. Deposit limit for housewives was set at Rs 2.5 lakh, while people depositing above Rs 2.5 lakh were to be scrutinised by the I-T department.

5. Bank withdrawal limit was set at Rs 4,000 per day and Rs 10,000 per week.

6. Exchange of currency limit was set at Rs 4,000 per day.

When ATMs re-opened after two days, serpentine queues were seen. Cash dried up within two or three hours. Re-filling could not help the cause. The government responded with a new set of measures.

7. The withdrawal limit was increased to Rs 20,000 per week.

8. The limit for the exchange of currency was increased to Rs 4,500 per day.

9. Any business having a current account older than three months could withdraw up to Rs 50,000 per week.

10. With increasing difficulties, the withdrawal limit from ATMs was increased to Rs 2,500 per day per card. However, many ATMs failed to dispense Rs 2,500.

11. The system of indelible ink to mark the people making withdrawals was introduced, so that a person could make only one withdrawal per day. Not surprisingly, there is an extreme shortage of indelible ink and banks are using permanent markers instead. After facing much criticism from the public and the Opposition, the government further changed the withdrawal limits.

12. Farmers could draw up to Rs 25,000 per week against crop loans sanctioned and credited to their accounts.

13. Farmers can withdraw Rs 25,000 per week from an account where a farmer receives either by cheque, or it an amount is credited by RTGS account.

14. For wedding ceremonies, up to Rs 2.5 lakh can be withdrawn from a bank account that is KYC-compliant. A PAN card and self-declaration will be necessary. Only one member of a family, be it father or mother, can withdraw the money. 

15. For over-the-counter exchange of old Rs 500/1,000 notes, with effect from November 18, Rs 4,500 limit will be reduced to Rs 2,000.

16. Central government employees up to the group C cadre can draw a salary advance of up to Rs 10,000 in cash; that will be adjusted against their November salaries.

This is a clear indication that the government has not made up its mind as to how it can best handle the situation. The decision on withdrawals for weddings came after eight days of the announcement. Marriages were the first concern that had struck everyone, except the government.

This, however, might not just be the end. In the days to come, people can expect more revision in withdrawal norms, going by the current trend.

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