With the note ban impact on larger towns and cities abating fast, the Reserve Bank of India (RBI) has turned its attention to rural India where the situation is still not back anywhere near normal. Looking to bring relief, the central bank today issued an order saying that sending currency notes to these areas must be speeded up and that the quantity of sums dispatched too must be raised. RBI has put a figure to it too, to ensure there is no confusion. It said that banks must supply at least 40 per cent of currency to rural areas. In a statement, RBI said, “Banks should advise their currency chests to step up issuance of fresh notes to rural branches of RRBs, DCCBs and commercial banks, white Label ATMs in rural areas & post offices in rural areas on priority basis which are considered main rural channels of distribution.”
The RBI statement added, “As the rural requirements could vary from district to district depending on variations in the rural and urban mix of each district in terms of relative shares in CASA deposits and number of deposit accounts, to facilitate a need based approach in this regard a certain percentage of allocation has been assigned to each district depending on the rural and urban mix. The indicated proportion may be maintained on weekly average basis at each chest level as it may be difficult to stick to the proportion on daily basis.”
With the note ban impact in rural areas, where mobile phone penetration, especially in terms of making digital payments, is very poor, the public had found it tough to carry on their day-to-day business as ATMs and banks did not have enough currency notes to distribute – even wages paid to workers were affected as there was no cash available. Also, the fact that Rs 2000 note was the most available note added to problems – it was difficult to make small purchases and get change in return from shops.
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To make sure that the high denomination problems do not arise, RBI has issued fresh instructions about the denominational mix too. It stated, “Chests should issue bank notes in denominations of Rs 500 and below. In particular ATMs may be issued Rs 500s and Rs 100s. Off-site ATMs should be allocated higher proportion of cash as against on site ATMs as they are more important in last mile currency connectivity.”
In what will bring even more relief to the rural public, RBI announced, “Existing stock of other denominations notes below Rs 100 should be issued liberally. Banks should indent for coins, obtain supply from Issue Departments of Reserve Bank of India and ensure supply to public on priority basis.”
However, with queues almost disappearing in larger towns and the RBI in fact increasing the daily withdrawal limit to Rs 4,500, the worst of the demonetisation impact on the public is now almost over.