With RBI easing the weekly cash withdrawal limits for certain accounts, the Election Commission is set to ask candidates contesting assembly polls in five states to open current accounts to tide over currency crunch in meeting election expenses.
The central bank today announced lifting of daily restrictions on cash withdrawals from ATMs as well as current accounts.
The latest move comes close on the heels of the Election Commission expressing its displeasure to the RBI for rejecting the request to enhance the cash withdrawal limit for candidates to Rs 2 lakh per week.
After the decision of the RBI, the Election Commission has decided to ask all candidates to open current accounts for meeting election expenses, sources said.
Such a move will help candidates to have enough hard currency as well as overcome problems faced with the existing Rs 24,000 per week cash limit set on savings accounts, the sources said.
Candidates are bound to open an election account for meeting poll-related expenditure which is monitored by the EC. Since there is no mention of any specific category of account that needs to be opened, candidates mostly opt for savings account.
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With the central bank putting in place limits on cash withdrawals in the wake of note ban, candidates are facing problems in meeting expenses where hard cash is required.
The directions for the candidates related to opening current accounts are likely to be issued shortly by the poll watchdog.
RBI has removed all limits on cash withdrawals from current accounts/ cash credit accounts/ overdraft accounts with immediate effect.
“The limits on Savings Bank accounts will continue for the present and are under consideration for withdrawal in the near future,” it said.
On Wednesday, the Commission had told RBI that it has been apprised of the problems candidates were facing due to withdrawal limits imposed after the note ban.
It said the returning officer of the constituency would issue certificate that the person was a candidate in the fray and the contestant be allowed to withdraw Rs 2 lakh cash per week from the bank account opened especially to meet poll expenses.
The EC said the facility be extended till March 11, the day of counting.
The Commission said that with a weekly withdrawal limit of Rs 24,000, a candidate would be able to withdraw Rs 96,000 in cash during the election process which lasts three to four weeks.
It reminded the central bank that as per law, candidates contesting Assembly polls in Uttar Pradesh, Uttarakhand and Punjab can spend Rs 28 lakh each for electioneering.
The limit in Goa and Manipur is Rs 20 lakh each. The poll panel said despite paying amounts through cheques, candidates still need hard cash for petty expenses. Also the issue is further adversely effected in rural areas where banking facilities are negligible.
But RBI said that it was not possible for it to hike the limit at this stage for savings accounts.
An apparently peeved Commission wrote back to RBI Governor Urjit Patel expressing “serious concern about the cursory manner in which the issue has been dealt with”.
“…(It) appears that the RBI has not realised the gravity of the situation…in order to facilitate proper conduct of elections, it is imperative that directions issued by the Commission are complied with,” the poll panel had said.