Old note exchange limit cut to Rs2,000; norms eased for farmers

17 November 2016

The Union government, struggling to cope with the aftermath of its demonetisation of old Rs1,000 and Rs5,000 notes, today announced another set of changed rules as queues continued outside banks and ATMs on day eight. It reduced the limit on over-the-counter exchange of old notes for new ones to Rs2,000 per person from Rs4,500 earlier.

The centre has also given the option to its lower level employees up to Group C to draw an advance of Rs10,000 on their November salaries.

Besides, it relaxed the weekly withdrawal limits for farmers and Agriculture Produce Market Committee (APMC) traders.

It also allowed withdrawal of up to Rs 2.5 lakh from bank accounts for the explicit purpose of weddings.

''To enable a larger number of people to benefit, with effect from 18 November the existing limit of Rs4,500 will be reduced to Rs2,000. This will be once per person. The usage of indelible ink continues. The move is to ensure that a larger number of people reach the exchange counters,'' economic affairs secretary Shaktikanta Das said at a media briefing.

To questions that this move implied a shortage of cash with the banks, Das said that was a wrong assumption and that there was enough money in the system.

Das said that central government employees up to group C, including those of state-owned companies, military, railways and paramilitary organisations, will be given the option of taking salary advance up to Rs 10,000 in cash, which will be adjusted against their November salaries.

Given that crop sowing has slowed down at the commencement of Rabi season due to a cash crunch, the centre will now also allow farmers to draw Rs25,000 per week against farm loans sanctioned or Kisan credit cards to meet their expenses. Farmers can also withdraw the same amount per week from their own accounts.

For traders in APMC markets, the weekly withdrawal limit now stands at Rs50,000 per week for their business requirements. Das said that these provisions are subject to strict 'know your customer' (KYC) norms.

''Different states have different payment timelines for crop insurance premium. The central government has decided that time limit in cases of payment of crop loan insurance premium will be extended by 15 days,'' Das said.

Given that it is the wedding season in India and a lot of complaints have been received from people with wedding ceremonies in their families, Das also announced that up to Rs2.5 lakh will be permitted to be drawn from one of the bank accounts, either of the bride or the groom, or immediate kin.



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