RBI May Not Relax Cash Withdrawal Limit for 3 Weeks to a Month

A man walks past an ATM of State Bank of India branch in Mumbai. (Photo: Reuters)

Weekly cash withdrawal limit of Rs 24,000 is likely to stay for another three weeks to a month. It is only after a detailed analysis of transaction patterns and payment modes can the Reserve Bank of India (RBI) relax the norms or double the daily withdrawal limit.

Though the central bank has increased the limit of daily withdrawals since the announcement of demonetisation on 8 November, the weekly limits have stayed fixed at Rs 24,000.

A senior government employee, on conditions of anonymity, told Hindustan Times:

The cash situation is near normal and in the next one month, the restrictions would be eased considerably.

Sources close to the RBI have hinted that the central bank may ease the withdrawal limits to align them with the permissible Rs 24,000 weekly limit, in order to take the pressure off the banks.

Cash withdrawal caps would depend on the cash supply. Going by the status at present, it looks that the limit could be eased around middle to end February.

Soumya Kanti Ghosh, Chief Economic Adviser, State Bank of India

Demonetisation flushed out Rs 15.4 lakh crore from the system, while the RBI brought back Rs 9.2 lakh crore.

Last week, RBI governor Urjit Patel was asked by the Parliamentary Standing Committee on Finance to come up with a timeline in which the withdrawal restrictions can be eased off.

The panel is expected to call on him again after the presentation of the Union Budget. Patel is expected to brief the panel on demonetisation and its after-effects.

Though Patel has maintained that the restrictions are temporary, pressure is evidently mounting on him.

According to a State Bank of India (SBI) study, 80% of the scrapped currency will be back in circulation by February.

(With inputs from Hindustan Times)

Also Read: First Budget Since Demonetisation: What We Can Expect