To encourage people to deposit valid currency notes in banks, The Reserve Bank of India (RBI) on Monday informed that the relaxation on the withdrawal limit of deposits from bank deposit accounts. On RBI website, it announced that it will extend the withdrawal limit for deposits that have been made in the notes that are presently legal.
Now, bank customers would be able to withdraw deposits made in current legal tender notes beyond the current limits, a move aimed at increasing currency circulation in the system. For example, if someone deposits valid legal tenders (Rs 2,000, Rs 500, Rs 100, Rs 50, Rs 20, Rs 10, Rs 5) of Rs 4,000, the withdrawal limit for that person would rise by Rs 4,000 over and above the weekly withdrawal limit of Rs 24,000.
For the current accounts, the withdrawal limit is Rs 50,000 a week for small traders. In a late evening circular, the Reserve Bank said, “it has been reported that certain depositors are hesitating to deposit their money into bank accounts in view of the current limits on cash withdrawals from accounts.”
“As it is impeding active circulation of currency notes, it has been decided, on careful consideration, to allow withdrawals of deposits made in current legal tender notes on or after November 29, 2016, beyond the current limits; preferably, available higher denomination bank notes of Rs 2000 and Rs 500 are to be issued for such withdrawals,” RBI added.
On the November 8, Prime Minister Mr. Narendra Modi announced the withdrawal of higher currency notes of Rs 500/1000, tends to total dependency on the lower currency notes (Rs 100 and below). RBI put some limitation for withdrawal to serve equally, as Rs 500/1000 notes account 86% of total Indian currency by value.