Reserve Bank Of India Curbs Cash Withdrawals

The Reserve Bank of India (RBI) capped the limit on withdrawals from Savings Account at ₹ 24,000 a week. The limit on weekly withdrawals from Current Account was raised to ₹ 1 lakh earlier this month from the ₹ 50,000 set just after the demonetization announcement. For the common man, only the daily withdrawal limit from his/her Savings Account, either from the ATM or a bank has been increased to ₹ 24,000 instead of ₹10,000 per day previously. But that is the maximum an account holder can withdraw in a week.

As of now, RBI’s curb on withdrawals on Savings Account does not impact a large number of savings account holders. The RBI said individual banks may set their own limits on withdrawals, just as it was before demonetization. The limits on bank withdrawals came into effect after the withdrawal of ₹ 500 and ₹ 1000 notes announced due to a severe cash crunch with the banks. The Government wants to ensure there is adequate cash supply, post demonetization and cash withdrawals.

Money Control report stated the daily supply of cash was ₹150 crores for each bank in large cities before demonetization. That plummeted to less than ₹10 crores per day for most banks. Now it is at ₹55 crore per day for Mumbai, Delhi, Kolkata. This is why the daily withdrawal limit has been raised. But there is still a huge deficit in currency supply, given the demand.

RBI said the ₹ 24,000 limit on withdrawals from savings accounts per week could be relooked. “The limits on savings bank accounts will continue for the present and are under consideration for withdrawal in the near future. Banks are urged to encourage their constituents to keep up with the digitization movement of payments towards cashless transactions,” RBI said.

The Election Commission (EC) strongly opposed RBI’s decision in NOT letting political candidates draw more from their Savings Account for campaigning. RBI said it will be biased to a certain segment of the society if it tailors the withdrawal limits based on a community’s need.