RBI lifts all post-demonetisation curbs on bank transactions

The Reserve Bank of India has withdrawn a slew of restrictions imposed on cash withdrawals following the 8 November demonetisation with effect from Monday (13 March) – a day after results of elections to five states were declared on 11 March.

''Effective March 13, 2017, there will be no limit on cash withdrawals from savings accounts,'' RBI had said in its preliminary assessment report on demonetisation.

The limit of withdrawal from savings accounts, which was initially set at Rs20,000 per week, was revised to Rs24,000 and further to Rs50,000 per week effective 23 February.

The RBI has already removed withdrawal limits from current accounts effective 30 January. RBI has also lifted restrictions on cash withdrawals at ATMs in phases. RBI raised the ATM withdrawal limit for savings account holders from Rs2,000 per day to Rs2,500 and Rs4,500 per day in December and subsequently to Rs10,000 per day from 16 January.

The curbs on withdrawal of currency notes from banks were imposed from 10 November to check currency flow from the banks subsequent to the 8 November demonetisation of Rs500 and Rs1,000 notes.

Officials said that lifting of withdrawal curbs would also imply that remonetisation process was almost complete and banks and ATMs were fully equipped to disburse cash.

However, private sector lenders, including ICICI bank, HDFC Bank, HSBC and Axis Bank, have informed their customers about the resumption of transaction charges on cash withdrawals after a certain limit to put a restriction on excess withdrawal.

On 11 March, the central bank also released a note titled 'Macroeconomic Impact of Demonetisation - A Preliminary Assessment', explaining the effects of demonetisation on the economy.

RBI said while the demonetisation impacted various sectors of the economy in varying degrees, the adverse impact was transient and felt mainly in November and December 2016.

"The impact moderated significantly in January 2017 and dissipated by and large by mid-February, reflecting the fast pace of remonetisation. The latest CSO estimates suggest that the impact of demonetisation on GVA growth was modest.

"Currency squeeze due to demonetisation along with seasonal factors pushed food inflation significantly down but has not had much impact on inflation excluding food and fuel.

"A surge in deposits led to a sharp expansion in the consolidated balance sheet of scheduled commercial banks and created large surplus liquidity conditions. These were managed by the Reserve Bank of India through a mix of conventional and unconventional policy instruments."