It was not a merry Christmas in India, and it is unlikely to be a very happy New Year either, as the restrictions on withdrawal of cash from banks and ATMs are likely to continue beyond the promised 30 December, with currency printing presses and the Reserve Bank of India still unable to meet the demand for new currency notes.
As the 50-day deadline given by Prime Minister Narendra Modi himself for the completion of the demonetisation process draws near, there is a growing consensus among bankers that the restrictions on withdrawals would have to continue in the New Year to maintain the orderly functioning of banks.
The RBI has infused just Rs5.92 lakh crore in the banking system between 9 November and 19 December against Rs 15.4 lakh crore of scrapped notes.
Banks at many places are not in a position to disburse even the current limit of Rs24,000 per week due to the cash crunch and are rationing currency depending on cash availability.
If the limit is ended for individuals and businesses from 2 January, it is unlikely that banks would be able to disburse the higher demand for valid currency given the current cash position.
"Most of us think that the withdrawal limit would not be completely withdrawn.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 Business Standard.
With banks struggling to meet the demand of individual customers, it would be impossible to service businesses big and small requiring cash in large quantities, the official said, and the only way would be to relax the limit gradually.
Recently, State Bank of India chairperson Arundhati Bhattacharya had also indicated that restrictions on withdrawals cannot be lifted entirely unless more cash is made available to banks.
Since the demonetisation of Rs500 and Rs1,000 notes, the government has fixed a limit of Rs24,000 per week on withdrawals from bank accounts and Rs2,500 per day from ATMs in view of the currency crunch.
The government and RBI have not specified when the restrictions will be withdrawn.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 30 December.
Even bank unions are of the opinion that the restrictions cannot be done away with in one go. In all likelihood the restrictions on withdrawal would continue for some more time, said All India Bank Officers' Confederation (AIBOC) general secretary Harvinder Singh.
The situation of currency supply is known to everyone and it would be difficult to lift the limit from 2 January, Singh told Business Standard, adding that small businesses are waiting for the cap to go so that they can withdraw as per their requirement.
According to RBI, banks had got deposits of Rs12.4 lakh crore defunct notes by 10 December.