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Govt relaxes cash withdrawal norms, move may help small businesses

black money crackdown Updated: Nov 14, 2016 20:06 IST
Black money crackdown

Economic affairs secretary Shaktikanta Das said businesses with current accounts active for three months can withdraw Rs 50,000 every week.(PTI file photo)

The government relaxed cash withdrawal norms on Monday in a bid to help small businesses and the rural poor, but a bank holiday in 18 states and empty ATMs piled more misery on the people from last week’s surprise ban on high-value banknotes.

Throwing a lifeline to millions of traders crippled by a cash crunch, economic affairs secretary Shaktikanta Das said businesses with current accounts active for three months can withdraw Rs 50,000 every week.

Banking correspondents – a 130,000-strong informal network of agents who help bridge the last-mile connectivity between banks and villages – were also allowed multiple withdrawals a day, with an individual transaction limit of Rs 50,000.

Read | PM Modi holds late-night meeting with ministers on demonetisation

Das’ remarks were aimed at tackling the chaos unleashed by the abrupt withdrawal of 500 and 1000-rupee banknotes by Prime Minister Narendra Modi to fight black money and counterfeiting. But with banks closed and ATMs dry they did little to help the situation on Monday.

Banks were open in south Indian states, Gujarat, Tripura, Goa and Kerala, among others. But in the rest of the country, even ATMs weren’t refilled, leaving many to fear the crowds will swell manifold when banks re-open on Tuesday.

Meanwhile, speaking at a public rally in Uttar Pradesh, Modi justified the “demonetisation”, saying the poor were sleeping peacefully and those who stashed ill-gotten money were running from pillar to post trying to buy sleeping pills.

“I am trained to make ‘kadak’ (strong) tea since my childhood and I know poor people like this type of tea, while the rich feel its bitterness,” he said, referring to his days as a tea seller.

But the less-than-perfect execution of the “demonetisation” plan has seen a united opposition sharpen its attack against the move ahead of the winter session of parliament starting Wednesday.

Read | Oppn attacks Modi over demonetisation, Mamata seeks anti-BJP front

Top parties, including the Congress, Janata Dal (United), Samajwadi Party, Trinamool Congress, and the Left parties met on Monday to draw up a common floor strategy against the government. The opposition wants the plan withdrawn, saying the move will not help fight black money but only put people through hardship.

The latest decisions on easing the cash crunch came in a late night meeting chaired by Modi on Sunday.

The Rs 10,000 limit on withdrawals from banks per day and the weekly limit of Rs 20,000 have also been enhanced. While there will be no daily limit, the weekly limit has been increased to Rs 24,000.

ATMs will start dispensing new Rs 500 notes by Tuesday, Das said. An extended daily limit of ATM cash withdrawals – Rs 2,500 from Rs 2,000 – will apply to only re-calibrated machines.

The process of updating ATMs to dispense the new currency – which come in a fresh design and size – is expected to take up to three weeks.

There will be separate queues for the disabled and elderly and those who only want to exchange cash.

Two task forces have been formed to address the situation, one under the RBI deputy governor that will coordinate with banks and ensure adequate cash flow in the economy. The other panel is a team of seven, including secretaries and joint secretaries of the finance ministry, which will monitor the situation in rural areas.

Das said micro-ATMs will be introduced to dispense cash through debit and credit cards. Petrol pumps, pharmacies, water, electricity utilities to accept old notes till November 24.

Read | Tamil Nadu: Liquor vendor duped by Rs 2000 note forgery, as sales plummet