Restrictions on withdrawal of cash from banks and ATMs are likely to continue beyond December 30 as currency printing presses and RBI have not been able to keep pace with the demand of new currency notes.
As the 50-day deadline for completion of demonetization process draws near, there is a growing consensus among bankers that the restrictions on withdrawal would have to continue even in the New Year so as to maintain orderly working at the banks.
Banks at many places are not in a position to disburse even the current limit of Rs 24,000 per week due to cash crunch and are rationing the valid currency depending on cash availability.
If this limit is withdrawn for individual and businesses from January 2, it is unlikely that banks would be able to disburse the higher demand for valid currencies given the current cash position.
“Most of us think that the withdrawal limit would not be completely withdrawn. It is a possibility that it could be relaxed if the cash situation improves,” said a senior public sector bank official.
At a time when banks are struggling to meet the demand of individual customers, it would be impossible to service MSME and big corporates which requires cash in large quantity, the official said, the practical way would be to relax it gradually.
Recently, SBI Chairperson Arundhati Bhattacharya had also indicated that restriction on withdrawals cannot be lifted entirely unless more cash is made available to banks.
After the demonetization of high value Rs 500/1000 notes, the government has fixed a limit of Rs 24,000 per week on withdrawal from bank accounts and Rs 2,500 per day from ATMs in view of the currency crunch that followed.
The government and RBI has not specified when the restrictions will be withdrawn. Finance Secretary Ashok Lavasa had said the withdrawal cap would be will be reviewed after December 30.
Even bank unions are also of the opinion that the restrictions cannot be done away with in one go.
In all likelihood the restriction on withdrawal would continue for some more time in the best interest of banks as well as customers at large, said All India Bank Officers’ Confederation (AIBOC) General Secretary Harvinder Singh.
The situation of currency supply is known to everyone and it would be difficult to lift the limit from January 2, Singh said, adding that SME and small businesses are waiting for cap to go so that they can withdraw as per their requirement.
Reserve Bank of India has infused Rs 5.92 lakh crore in the banking system between November 9 and December 19 against Rs 15.4 lakh crore of scrapped notes.
According to RBI, banks had got deposits of Rs 12.4 lakh crore defunct notes by December 10.