Undecided or over-responsive?

compiled by Aarushi Kalra

A whole range of metaphors have been employed to describe the indecisiveness (or over-responsiveness) of the RBI since the fateful night of November 8, 2016. Not only has this rendered the RBI as the new laughing stock in town, but has raised some very serious questions on the reputation, transparency and accountability of this otherwise respectable institution. This occasion also calls for a sober analysis of the degree to which the autonomy of institutions is being undermined. To facilitate further research, we present to you a detailed summary of the RBI notifications issued since the withdrawal of legal tender status of Rs 500 and Rs 1000 notes. We would be happy to provide copies of the notifications on request.

RBI Notifications: Summary

  1. November 8, 2016:
    1. Banks to deposit old denomination notes with RBI
    2. Branches to estimate cash requirement and obtain in valid currency denominations
    3. Banks to remain shut on November 9
    4. ATMs to remain shut from November 8 midnight to November 10
    5. Banks to provide all cash withdrawals free of cost to customers till December 30, 2016
    6. Limit on ATM card withdrawals equal to Rs. 2000 till November 18, 2016
    7. Limit will be raised to Rs. 4000 per day from November 19 onwards
    8. Banks advised to provide adequate equipment to deal with work load and for timely detection of counterfeit notes
    9. Banking Hall, Public Areas and Counters advised to be under CCTV Surveillance and recordings to be stored
    10. Exchange Facility
      1. Old denomination notes with value up to Rs. 4000 may be exchanged in any legal tender notes. Limit to be revised in fifteen days
      2. No limit on deposits in notes which are tendered. In case KYC norms are incomplete, max value of deposits in such notes is Rs. 50,000
  • Cash withdrawal from a bank account over the counter to be restricted to Rs. 10,000 per day subject to an overall limit of Rs. 20,000 per week (including Rs. 2,000 withdrawal limit from ATMs) from the date of the notification until the end of business hours on November 24, 2016
  1. Persons unable to deposit old denomination currency by 30th can do so at specified RBI offices at dates to be specified later
  2. Business Correspondents may also be allowed to exchange old denomination notes up to a value of Rs. 4000 until December 30, 2016
  1. November 9, 2016
    1. Old denomination would continue to remain legal tender until November 11, 2016 for the following transactions
      1. At International Airports, for passengers carrying old denomination up to Rs. 5,000 to exchange for notes that are legal tender
      2. For foreign Tourists holding Foreign Currency or specified Bank notes in value not exceeding Rs. 5,000
    2. Banks and Payment Systems to remain operational on Saturday and Sunday (12th and 13th November)
    3. Withdrawal of provision regarding Business Correspondents exchanging old currency denomination
  2. November 10, 2016
    1. Weekly (Rs. 20,000) and daily (Rs. 10,000) cash withdrawal limits from banks not applicable to cash withdrawal from a bank account by:
      1. One bank from another bank
      2. Post Office
  • Money Changers at International Airport
  1. Operators of White Label ATMs
  2. Government Departments (only after producing valid justification/ evidence of cash requirement in writing ( November 11, 2016))
  1. November 11, 2016
    1. Banks required to report status of exchange of old currency denomination to RBI everyday
    2. Authorized Persons to issue Prepaid instruments to foreign tourists in accordance with instructions issued by Department of Payments and Settlement Systems, RBI
  2. November 12, 2016
    1. Banks to provide daily report of daily data on cash withdrawals over the counter and through ATMs
  3. November 13, 2016
    1. Revision of limit on exchange of old denomination from Rs. 4000 to Rs. 4,500 per day
    2. Daily limit on withdrawal from ATM increased from Rs, 2,000 to Rs. 2,500
    3. Weekly limit of withdrawal from Bank increased from Rs. 20,000 to Rs. 24,000
    4. Daily limit of withdrawal from Bank (Rs. 10,000) withdrawn
    5. Separate queues for Senior Citizens and the Disabled
    6. Withdrawal limit from Business Correspondent increased to Rs. 2,500
    7. The last date for submission of the annual life certificate for the government pensioners which is to be submitted in November every year extended upto January 15, 2017
  4. November 14, 2016
    1. District Central Cooperative Banks can allow their existing customer towithdraw from their accounts upto ₹ 24,000/- per week upto November 24, 2016. No exchange facility is to be provided by them
    2. Current Account holders now allowed to withdraw Rs. 50,000 in legal tender per week
    3. Banks advised to use mobile vans, micro ATMs etc.
    4. Banks may consider hiring retired employees for a short period
    5. Waive ATM charges levied on saving account holders withdrawing money from either own bank’s ATM or others’, till December 30, 2016
  5. November 15, 2016
    1. Concerned Bank officials to put indelible ink marks on Right Index finger of persons while they exchange old currency notes in metro cities
  6. November 16, 2016
    1. Banks to ask for PAN card details from persons depositing an amount exceeding Rs. 50,000 in case banks account is not seeded with PAN in compliance with IT Rules, 1962
  7. November 17, 2016
    1. The limit of exchange of old currency across the counter of banks to be Rs. 2000 wef November 18. This facility to be available only once per person
  8. November 18, 2016
    1. Limit of cash withdrawal at all PoS made uniform at Rs. 2,000 across all centres and no customer charges to be applied
  9. November 20, 2016
    1. Withdrawal limit unchanged at Rs, 2,500 for recalibrated ATMs and Rs. 2,000 for calibrated ATMs
  10. November 21, 2016
    1. Holders of current/ overdraft/ cash credit accounts, which are operational for the last three months or more, to withdraw up to Rs. 50,000 in cash, in a week. Enhanced limit for weekly withdrawal not applicable for personal overdraft accounts
    2. Provide an additional 60 days beyond what is applicable for the concerned regulated entity(RE) for recognition of a loan account as substandard in the following cases:
      1. Running working capital accounts (OD/CC)/crop loans, with any bank, the sanctioned limit whereof is ₹ 1 crore or less;
      2. Term loans, whether business or personal, secured or otherwise, the original sanctioned amount whereof is ₹ 1 crore or less, on the books of any bank or any NBFC, including NBFC (MFI). This includes housing loans and agriculture loans.
  • Loans sanctioned by banks to NBFC (MFI), NBFCs, Housing Finance Companies, and PACs and by State Cooperative Banks to DCCBs.
  1. Loans extended by DCCBs.
  1. Limits on cash withdrawals for the purpose of meeting wedding expenditures (before December 30, 2016) revised to Rs. 2,50,000
  2. Farmers allowed to withdraw up to Rs. 25,000 subject to compliance with KYC norms
  3. Traders registered with APMC markets/ mandis allowed to withdraw up to Rs. 50,000 from current accounts
  1. November 22, 2016
    1. Reiterating requirements to monitor activities following reports of fraudulent practices
    2. With regard to Rabi Crop Season- banks with currency chests should ensure adequate cash supply to the DCCBs and RRBs. Adequate cash supply to be ensured for rural branches of all commercial banks (including RRBs). Further, bank branches located in APMCs may also be given adequate cash to facilitate smooth procurement
    3. With regard to cash withdrawal for meeting wedding expenses, the following is to be furnished by the account holder:
      1. A detailed list of persons to whom the cash withdrawn is proposed to be paid
      2. 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
  • Purpose for which such payments are to be made
  1. PPI limit enhanced from Rs. 10,000 to Rs. 20,000
  2. Special dispensation for merchants with regard to PPIs
  1. November 23, 2016
    1. Banks advised not deposit old currency denominations in Small Saving Scheme accounts
  2. November 24, 2016
    1. Deposit under Guarantee Scheme to decongest storage facility at banks
      1. Banks may deposit SBNs directly with the offices of RBI under whose jurisdiction they are located
    2. Banks advised to maintain adequate supply of cash to meet requirement of cash for pensioners and Armed Forces Personnel
    3. Over the counter exchange of old currency denominations discontinued entirely wef November 24, midnight (only cash deposits of old currency notes to be accepted)
  3. November 25, 2016
    1. Weekly limit of Rs. 24,000 on cash deposits to remain unchanged
  4. November 27, 2016
    1. Introduced a new scheme for depositing old currency denomination with designated currency chest at the district level, under guarantee agreement similar to the current facility available at RBI offices (refer to November 24 notification)
  5. November 28, 2016
    1. Banks operating currency chests allowed to operate Chest Guarantee Scheme if they have additional space in their existing currency chest or additional storage space at the same centre
    2. Allow withdrawals of deposits made in current legal tender beyond the existing limits of cash withdrawals
  6. November 29, 2016
    1. Old currency denominations deposited in the currency chests, since November 10, 2016 will be considered as part of the chest balance in the soiled note category but such deposits will not be reckoned for calculating Chest Balance Limit/ Cash Holding Limit of the Banks
    2. With regard to Pradhan Mantri Jan Dhan Yojana, banks advised towards the following:
      1. Fully KYC compliant account holders may be allowed to withdraw ₹ 10,000/- from their account, in a month
      2. Limited or Non KYC compliant account holders may be allowed to withdraw ₹ 5,000 per month from the amount deposited through SBNs after November 09, 2016 within the overall ceiling of ₹ 10,000
    3. December 2, 2016
      1. To ensure that adequate allocation of banknotes are made for the rural branches, post offices and DCCBs, the banks are advised to involve the district co-ordinators (Lead District Managers) in facilitating distribution of currency from the currency chests
    4. December 6, 2016
      1. Review of Additional Factor of Authentication (AFA) requirement for low value online Card Not Present (CNP) transactions:
        1. The card issuing banks will offer the “payment authentication solutions” of the respective card networks to their customers on an optional basis. Customers opting for this facility will go through a one-time registration process requiring entry of card details, etc. and AFA by the issuing bank
        2. AFA requirement for transactions up to Rs. 2000 for online CNP transactions for the ‘payment authentication solutions’ provided by authorised card networks is relaxed
      2. December 9, 2016
        1. Technical audit of PPI issuers as a security and risk mitigation measure against cyber crime
      3. December 12, 2016
        1. Banks advised to report detection of counterfeit notes on a daily basis
        2. In light of reported seizures of new currency denominations, banks advised to maintain Daily Record of Issuances showing the serial numbers of Mahatma Gandhi (New) Series banknotes in the denominations received from RBI as remittance and issuance to their own branches, branches of other banks and post offices, branch wise and denomination wise on daily basis
      4. December 13, 2016
        1. Banks advised to maintain record of CCTV footage
      5. December 19, 2016
        1. Tenders of old currency denomination in excess of ₹ 5000 into a bank account will be deposited only once during the remaining period till December 30, 2016.
          1. The deposit will be made only after questioning the tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier
          2. The explanation should be kept on record to facilitate an audit trail at a later stage
  • An appropriate flag also should be raised in CBS to that effect so that no more tenders are allowed
  1. December 21, 2016
    1. Provisions of December 19 notification not applicable to fully KYC compliant account holders
  2. December 30, 2016
    1. Daily limit of withdrawal revised from Rs 2,500 to Rs 4,500 per card per day wef 1 January 2017.

(Aarushi Kalra is an MA (F) student at DSE. Please write to us at eostre@econdse.org for more details)

 

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