Deposits of above Rs 5,000 in banned banknotes can be made only once till December 30, the Reserve Bank of India (RBI) said on Monday, the latest in a series of banking restrictions after the government recalled high-value bills.
Such deposits will be accepted only after two bank officials satisfy themselves on why the deposits were not made earlier. The accounts must also be compliant with customer information details, called KYC, otherwise deposits can be restricted to Rs 50,000, the RBI said.
“The (depositor’s) explanation should be kept on record to facilitate an audit trail at a later stage,” the central bank said in a notification.
The government pulled out 500-and 1,000-rupee bills on November 8, in an effort to fight a parallel ‘black economy’, and has since announced near-daily changes to banking rules to manage the transition. The banned notes can be deposited in banks till December 30 and thereafter at select RBI counters till March 31.
But the shock move has led to a severe cash crunch. Cash withdrawals from banks have been restricted to Rs 24,000 per account per week, although most banks are unable to provide even that. The government has said it will replenish most of the withdrawn cash – about 86% of the money in circulation -- with new 2000-and 500-rupee notes.
Withdrawal of Legal Tender Character of existing ₹ 500/- and ₹ 1000/- Bank Notes (Specified Bank Notes) - Deposit...https://t.co/eTDuFizbP6— ReserveBankOfIndia (@RBI) December 19, 2016
Late in the evening, finance minister Arun Jaitley said no questions would be asked junked currency was deposited in one go but repeat deposits might raise queries. “If they are going to go everyday and deposit some currency, same person, that gives rise to suspicion. In that event, a person may have something to worry about. Therefore everyone is advised whatever old currency you have, please go and deposit it now.”
Union law minister Ravi Shankar Prasad said the government would come up with a “structured response” on the new norms. “They have issued something, the government will come with structured response on that,” he said after meeting with heads of banks.
Monday’s changes also stipulated that even for deposits below Rs 5000, made in one go or cumulatively till December 30, customers could be questioned should the banks feel the need.
At the time of demonetising the high-value bills, the government had said people should not panic and crowd banks, and that they had enough time to deposit or exchange their money.
“Many people could not deposit money as they were waiting for the queues to end. This shows the ill-intent and mismanagement of the Modi government,” Congress chief spokesperson Randeep Surjewala said.
The decision is seen aimed at discouraging a late surge in deposits of unaccounted-for money in regular bank accounts. The government has said it had come across instances of the corrupt using bank accounts of the poor to make deposits of banned notes.
The RBI notification said the banking new restrictions were placed to encourage people to make deposits under the Pradhan Mantri Garib Kalyan Yojana, 2016, a new window to declare unaccounted for wealth.
But the principle opposition party wasn’t convinced and questioned the decision to depute bank officials to quiz people. “Banks are meant to serve people. Don’t turn them into police stations. This actually exhibits a criminal mind,” Surjewala said.