Cash Withdrawal Restrictions Likely To Go Away By February-End, Say Bankers

New Delhi: With the cash crunch situation easing gradually, the Reserve Bank of India may remove cash withdrawal limits by the end of next month, say bankers. The central bank had recently raised the ATM withdrawal limit to Rs 10,000 per day, but maintained the weekly limit at Rs 24,000 for savings accounts and Rs 1 lakh in case of current accounts.

Restrictions on cash withdrawals are entirely a decision to be taken by the Reserve Bank of India and the central bank would make a decision in this regard after making a holistic assessment of the situation, Bank of Maharashtra executive director R K Gupta told news agency Press Trust of India.

"I think the restrictions on withdrawal by RBI should be completely lifted by February-end or by first half of March as cash situation is easing gradually," Mr Gupta added.

The economic research department of SBI in a report said that it estimates that 88 per cent of the currency could return into the financial system by February-end.

"By the end of February, 78-88 per cent of the currency could be back in the system under the best case scenario in terms of an optimal currency distribution (more small denomination notes),"a report from SBI said.

Things would be "pretty close to normal" within the coming two months it seems, the SBI Research report added.

A senior official official of a state-run bank also acknowledged that the situation is easing.

The RBI has been progressively easing the curbs and it is a matter of weeks before the withdrawal restrictions are eased further, the official said, adding, "My hunch is that it should happen before end of the current fiscal."

The Reserve Bank of India had earlier increased the daily limit on cash withdrawals from ATMs to Rs 4,500 from Rs 2,500, effective January 1, a day after the 50-day demonetisation period ended.

Meanwhile, Reserve Bank of India Governor Urjit Patel did not give a timeframe before the Standing Committee on Finance for return of normalcy in the banking system even as the central bank asserted that Rs 9.2 lakh crore or 60 per cent of demonetised currency had been replaced.

Prime Minister Narendra Modi had on November 8 last year announced demonetisation of old Rs 500 and Rs 1,000 notes, promising that the problems faced due to the sudden would be eased within the next 50 days.

After the government's decision, the Reserve Bank of India had put restrictions cash withdrawals from ATMs as well as from banks to deal with shortage of new high denomination currency notes. This led to long queues at ATMs and bank branches.

All over the country, the banks had to deal with huge rush of people who thronged their branches to deposit junked notes. The deadline for depositing old notes with banks ended on December 30, 2016.

Meanwhile, the Reserve Bank of India had last week said it still did not know the "exact number" of junked currency notes in circulation and was still "reconciling" the number of notes that were deposited back.

"The exact number of Specified Bank Notes (SBNs) withdrawn from circulation is being worked out," the central bank had said in a written submission to Parliament's Public Accounts Committee (PAC).

(With inputs from PTI)