Cash crunch due to demonetization

Banks at many places are not in a position to disburse even the current limit of Rs 24,000 per week due to the cash crunch and are rationing the valid currency depending on cash availability. If this limit is withdrawn for individual and businesses from January 2, it is unlikely that banks would be able to disburse the higher demand for valid currencies given the current cash position.

Difficulty to practice MSME

"Most of us think that the withdrawal limit would not be completely withdrawn. It is a possibility that it could be relaxed if the cash situation improves," a senior public sector bank official told PTI. At a time when banks are struggling to meet the demand of individual customers, it would be impossible to service MSME and big corporates which require cash in large quantity, the official said, the practical way would be to relax it gradually. Recently, SBI chairperson Arundhati Bhattacharya had also indicated that restriction on withdrawals cannot be lifted entirely unless more cash is made available to banks.

Withdrawal limit is 24000 per week

After the demonetization of high-value Rs 500 and Rs1000 notes, the government has fixed a limit of Rs 24,000 per week on withdrawal from bank accounts and Rs 2,500 per day from ATMs in view of the currency crunch that followed. The government and the RBI have not specified when the restrictions will be withdrawn. Finance Secretary Ashok Lavasa had said the withdrawal cap would be will be reviewed after December 30.

Rs 12.4 lakh crore deposited in banks

The Reserve Bank of India has infused Rs 5.92 lakh crore in the banking system between November 9 and December 19 against Rs 15.4 lakh crore of scrapped notes. According to the RBI, banks had received deposits of Rs 12.4 lakh crore defunct notes by December 10.