December 19th, 2016
It’s more than 3 weeks since the government announced the withdrawal of the old Rs 500 and Rs 1000 notes. Here is an update on the issue with all the changes effected in the last few days.
New Deposit Rules (with effect from 19th December 2016)
- The old notes in excess of Rs 5000 into a bank account will be received for credit only once during the remaining period till December 30, 2016. The credit in such cases shall be afforded only after questioning the depositor, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised to that effect so that no more such deposits are allowed.
- Old notes of up to Rs 5000 in value received across the counter will allowed to be credited to bank accounts in the normal course until December 30, 2016. Even when deposits smaller than Rs 5000 are made in an account and such deposits taken together on cumulative basis exceed Rs 5000, they may be subject to the procedure to be followed in case of deposits above Rs 5000, with no more deposits being allowed thereafter until December 30, 2016.
- It should also be ensured that full value of deposits of old notes in excess of Rs 5000 shall be credited to only KYC compliant accounts and if the accounts are not KYC compliant credits may be restricted up to Rs 50,000 subject to the conditions governing the conduct of such accounts.
- The above restrictions shall not apply to tenders of old notes for the purpose of deposits under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016.
- The equivalent value of old notes deposited may be credited to an account maintained by the depositor at any bank in accordance with standard banking procedure and on production of valid proof of Identity.
- The equivalent value of old notes deposited may be credited to a third party account, provided specific authorisation accorded by the third party is presented to the bank, following standard banking procedure and on production of valid proof of identity of the person actually depositing, as indicated in Annex-5.
Quoting of PAN is mandatory in the following transactions
- Deposit with a bank in cash exceeding Rs 50,000 in a single day.
- Purchase of bank drafts or pay orders or banker’s cheques from a bank in cash for an amount exceeding Rs 50,000 in a single day.
- A time deposit with a Bank or a Post Office.
- Cash deposits aggregating to Rs 2,50,000 or more during the period 09th November, 2016 to 30th December, 2016.
- The over the counter exchange facility has been discontinued from the midnight of 24th November, 2016 at all banks.
- The exchange of the old Rs 500 and Rs 1000 notes will continue to be available at the counters of the Reserve Bank up to the current limits of Rs 2000 per person.
- Foreign citizens will be permitted to exchange foreign currency up to Rs. 5000 per week. Necessary entry to this effect will be made in their passports. This will be applicable up to 15th December 2016.
- The limit has been decreased from the existing Rs 4,500 to Rs 2,000. The reduced limit will be applicable from 18th November, 2016.
- Separate queues will be arranged for Senior Citizens and Divyang persons, customers with accounts in the Bank and for customers for exchange of notes.
Cash Withdrawal at Bank Branches
- The weekly limit of Rs 20,000 for withdrawal from Bank accounts has been increased to Rs 24,000. The limit of Rs 10,000 per day has been removed.
- RBI has issued a notification to allow withdrawals of deposits made in the valid notes (including the new notes) on or after November 29, 2016 beyond the current limits. The notification states that available higher denominations bank notes of ₹ 2000 and ₹ 500 are to be issued for such withdrawals as far as possible. But no higher limit has been set for such withdrawals. It is also unclear if this facility will be available to only those who make deposits with the valid notes.
- Business entities having Current Accounts which are operational for last three months or more will be allowed to draw Rs 50,000 per week. This can be done in a single transaction or multiple transactions.
- District Central Cooperative Banks (DCCBs) will also facilitate withdrawals with the same limits as normal banks.
- Restrictions on PMJDY accounts: Fully KYC compliant account holders will be allowed to withdraw Rs 10,000 from their account, in a month. The branch managers may allow further withdrawals beyond this limit within the current applicable limits only after ascertaining the genuineness of such withdrawals and duly documenting the same on bank’s record.
- Limited or Non KYC compliant account holders will be allowed to withdraw Rs 5,000 per month within the overall ceiling of Rs 10,000.
- Withdrawal limit increased to Rs 2,500 per day for ATMs that are recalibrated. This will enable dispensing of lower denomination currency notes for about ₹ 500/- per withdrawal.
- Micro ATMs will be deployed to dispense cash against Debit/Credit cards up to the cash limits applicable for ATMs.
- ATMs which are yet to be recalibrated, will continue to dispense ₹ 2000/- till they are recalibrated.
Special Provisions for Farmers & Traders buying Agricultural Produce
- Farmers would be permitted to withdraw up to Rs 25,000 per week in cash from their KYC compliant accounts only. These cash withdrawals would be subject to the normal loan limits and conditions. This facility will also apply to the Kisan Credit Cards (KCC).
- Farmers receiving payments into their bank accounts through cheque or other electronic means for selling their produce, will be permitted to withdraw up to Rs 25,000 per week in cash. But these accounts will have to be KYC compliant.
- Farmers can purchase seeds with the old high denomination bank notes of Rs.500 from the Centres, Units or Outlets belonging to the Central or State Governments, Public Sector Undertakings, National or State Seeds Corporations, Central or State Agricultural Universities and the Indian Council of Agricultural Research (ICAR), on production of proof of identity.
- Traders registered with APMC markets/mandis will be permitted to withdraw up to Rs 50,000 per week in cash from their KYC compliant accounts as in the case of business entities.
- The last date for payment of crop insurance premium has been extended by 15 days.
Special Provisions for Weddings
- Families celebrating weddings will be permitted to draw up to Rs 2,50,000 in cash from their own KYC compliant bank accounts. The amounts can be drawn only by either of the parents or the person getting married. Only one of them will be permitted to draw this amount. This limit of Rs 2,50,000 will apply separately to the girl’s family and the boy’s family. The person drawing such amount has to furnish the PAN details. Further, a self-declaration will have to be submitted by the person to the effect that only one person from his/her family is drawing the amount.
- The application for withdrawal has to accompanies by the following documents
- An application form as per the annexure
- Evidence of the wedding, including the invitation card, copies of receipts for advance payments already made, such as Marriage hall booking, advance payments to caterers, etc.
- A detailed list of persons to whom the cash withdrawn is proposed to be paid, together with a declaration from such persons that they do not have a bank account,where the amount proposed to be paid is ₹ 10,000/- or more. The list should indicate the purpose for which the proposed payments are being made.
Special Provisions for Group C & Other Employees
Central Government employees up to Group `C’ including equivalent levels in the Defence and Para Military Forces, Railways and Central Public Sector Enterprises will be given an option to draw salary advance up to Rs 10,000 in cash. This amount will be adjusted in their salary for November, 2016.
Using the Banking Correspondents Network (BCs) for rural areas
- Banks will increase the cash holding limit of BCs to at least Rs 50,000 each. Banks will also allow higher limits in appropriate cases.
- Banks will replenish the cash with BCs multiple times in a day as per requirement of the BCs.
- The 1.2 lakh BCs and 1.3 lakh branch Post Offices, a total number of 2.5 lakh points in rural areas will be available to disburse cash and facilitate cash withdrawals from Bank Accounts.
- All Central Government Departments and Public Sector Enterprises are being instructed to use the method of e-payments to the maximum extent possible.
- RBI has advised National Payments Corporation of India (NPCI) to waive its transaction charges on transactions settled through National Financial Switch(NFS) till 31st December, 2016.
- Banks are also being advised to waive similar charges currently levied by them.
Old Notes will be accepted for the following till 15th December 2016
The old Rs 500 notes will be accepted till the midnight of 15th December 2016 for the following transactions/payments. It has to be noted that the old Rs 1000 notes won’t be accepted in these places. The government has also notified certain changes the earlier list. Purchase of Airline tickets & petrol/diesel with the old notes will not be possible from 03rd December.
Apart from these
- Exemption of Toll fees on National Highways (NH) has been extended till 02nd December. The old Rs 500 notes will be accepted at toll plazas from 03rd to 15th December 2016. It has to be noted that the old Rs 500 notes will be accepted only be for purchasing FASTags and for making toll payments of more than Rs 200.
- Parking charges at airports have been suspended till 21st November.
- Old Rs 500 notes can be used at railway ticketing counters, ticket counters of Government or Public Sector Undertakings buses for purchase of tickets only till 10th December 2016.
- Old Rs 500 notes can be used for making payments to catering services on board, during travel by rail only till 10th December.
- Old Rs 500 notes can be used for making payments for purchasing tickets for travel by suburban and metro rail services only till 10th December.
- Payment of School fees up to Rs. 2000 per student in Central Government, State Government, Municipality and local body schools.
- Payment of fees in Central or State Government colleges.
- Payments towards pre paid mobile top-up to a limit of Rs. 500 per top-up.
- Purchase from Consumer Cooperative Stores will be limited to Rs. 5000 at a time.
- Payment of current and arrear dues to utilities will be limited to only water and electricity. This facility will continue to be available only for individuals and households.
- Pensioners are required to submit Annual Life Certificate during the month of November. This time limit has been extended up to 15th January, 2017.
- Banks are advised to take appropriate steps to meet the likely demand for cash by government employees & pensioners. They are advised to
- Ensure adequate cash availability for taking care of the requirements of pensioners
- Ensure adequate supply at the military outposts for the cash requirements of the Armed Forces personnel.
One may approach the control room of RBI by email or on Telephone Nos 022-22602201 or 022-22602944.
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