Legal Tender Deposits Will Lead to Higher Bank Withdrawals: RBI
File image of People standing in a long queue to exchange their old notes at a bank in Chennai. (Photo Credit: PTI)
Mumbai: In a bid to woo bank deposits, the RBI has said people depositing money other than the old currency will now be allowed to take out that amount on top of the stipulated Rs 24,000 weekly limit.
The Reserve Bank of India notification on Monday night is aimed at encouraging people to deposit money in their bank accounts.
"It has been reported that certain depositors are hesitating to deposit their monies into bank accounts in view of the current limits on cash withdrawals from accounts," the RBI said.
"As it is impeding active circulation of currency notes, it has been decided to allow withdrawals of deposits made in current legal tender notes on or after November 29 beyond the current limits," it said.
Preferably, available higher denominations bank notes of Rs 2,000 and Rs 500 will be issued for such withdrawals, it added.
"Because of the current withdrawal limits, people may be holding on to cash in new Rs 500 and 2,000 or Rs 100 notes," a RBI official told IANS.
"People are not depositing because they fear that if they do so, they will not be able to withdraw it," the official added.
If a person deposits Rs 10,000, of which Rs 6,000 may be in old currency and Rs 4,000 in new notes or other legal tender, he can withdraw Rs 4,000 any time in addition to the Rs 24,000 weekly limit, the RBI said.
This will stand true for any amount of large deposits in legal tender made from Tuesday, the official said.
"This will be very useful for traders who receive cash in large amounts in new notes and may not be depositing it in view of withdrawal limits," the official added.