The Reserve Bank of India will scrap limits on cash withdrawal from savings accounts by March 13 in two stages, Deputy Governor R Gandhi said on Wednesday. In the first stage, the RBI will hike the cash withdrawal limit from savings accounts to Rs 50,000 per week by February 20, Gandhi said.
“Effective from 13th March 2017 there will be no limits prescribed by the Reserve Bank for cash withdrawals from savings bank accounts,” Gandhi said.
The central bank had imposed strict withdrawal limits after demonetisation to ensure maximum distribution of the new currency notes in view of the constraints on printing and supplying of the currency. However, as it progressed with remonetising the system by issuing new currency notes, it gradually relaxed the limits on cash withdrawals from savings accounts, and removed those altogether from current and cash credit accoutns.
“The Reserve Bank partially restored the status-quo ante effective from 1st February 2017 by removing the restrictions on cash withdrawal from current accounts and cash credit accounts, and withdrawal through ATMs. However, the limits on cash withdrawals from savings accounts continued to be in place,” Gandhi said.
“In line with the pace of remonetisation, it has now been decided to remove these limits in two stages,” Gandhi added.
Earlier, immediately after demonetisation, people were allowed to withdraw from their savings bank accounts only Rs 4,000 per day from the branch and Rs 2,500 per day from ATMs. This cap was later relaxed to Rs 10,000 per day, with the weekly limit remaining at Rs 24,000 per week.
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Prime Minister Narendra Modi and the government has been pushing for an increasingly cashless economy, ostensibly to stem the use of unaccounted wealth and keep a better record so as to eventually increase the tax base. It has been promoting more and more digital transactions, following the surprise demonetisation of high-value currency notes on November 8.
The government has ever since announced incentives on using digital wallets in forms of cash-back on making payments for various utilities such as petrol and daily dairy supplies.
Earlier last month, Finance Minister Arun Jaitley proposed to ban cash payments above Rs 3 lakh in a major move to limit the use of cash in the economy and to promote more organised payments.
RBI said that new currency notes worth Rs 9.92 lakh crore had been issued till January 27 since demonetisation, as against Rs 14.5 lakh crore of old currency that was sucked out of the economy.