In a review meeting chaired by Prime Minister Narendra Modi last evening, the government took some key decisions to lessen the impact of currency demonetisation on public and advised them not to panic.
From separate queues for senior citizens, to activating more post office branches for wider reach of new currency, here are 10 important decisions taken by the government:
1. The existing exemptions for acceptance of old Rs 500 and Rs 1000 notes for certain types
of transactions has been extended beyond November 14, to November 24.
2. The cash holding limit of banking correspondents (BCs), representatives authorised by
banks to deliver banking facilities at people’s doorsteps, has been increased to Rs 50,000
BCs provide services where a lender doesn’t have a branch, especially in rural areas; the
system was started by the Reserve Bank of India through a regulation in 2006. Banks will replenish the cash with BCs multiple times in a day as per requirement.
3. The supply of cash to branch post offices has been enhanced to facilitate cash withdrawals from postal accounts.
4. Micro ATMs will be deployed to dispense cash against debit/credit cards up to the cash limits applicable for ATMs. The handheld Micro ATMs have the facility of mobility and deployment at the required places.
5. The weekly withdrawal limit of Rs 20,000 has been enhanced to Rs 24,000. The withdrawal limit of Rs 10,000 per day has been removed.
6. The limit of Rs 4,000 for over the counter exchange has been increased to Rs 4,500.
7. Cash limit of ATMs enhanced to Rs 2500 from Rs 2000. ATMs are being progressively recalibrated so that more and more can be brought into this enhanced limit.
8. Business entities having current accounts which are operational for last three months or more will be allowed to draw Rs 50,000 per week.
9. All central government departments and public sector enterprises instructed to use epayments to the maximum extent possible. Banks advised to waive transaction charges till December 31.
10. Time limit for submitting annual life certificate for pensioners extended to January 15, 2017.
Allaying fears of shortage, the Finance Ministry today said there is enough cash in the system and delivery channels are being augmented across the country to help cashstarved
Giving details of the highlevel meeting chaired by Prime Minister Narendra Modi late last
night, Economic Affairs Secretary Shaktikanta Das said it was decided to activate all
channels for dispensing cash.
With regard to rural areas, he said the cash holding limit for 1.2 lakh banking correspondents (BCs) has been increased to Rs 50,000 and banks have been given flexibility to increase this limit on case to case basis.
It has been also decided to provide cash multiple times to the BCs, so that rural population is served.
Besides, supply of cash to 1.3 lakh branch post offices would be enhanced so that public
can get banknotes.
Together, these 2.5 lakh delivery points, mostly in rural areas, would be able to give bigger
quantum of cash to the public, he added.
For the urban population, Das said recalibration of ATMs has already started and they will
start dispensing the new Rs 2,000 currency notes from today or tomorrow.
However, he clarified that the higher cash withdrawal limit of Rs 2,500 is only for recalibrated ATMs.
Additionally, a large number of microATMs will be deployed to help people withdraw cash through debit cards.
To mitigate their hardship, the RBI has started distributing high security Rs 500 notes from yesterday.
To help small traders meet their business requirements, Das said the government has decided to increase the cash withdrawal limit to Rs 50,000 per week for small businesses.
“Considering the cash availability, (for) the business entity having current account for past three months, the limit has been increase to Rs 50,000 per week to pay wages and meet sundry expenses,” he said.
He stressed that “enough cash is available with the RBI and there is absolutely no reason for the members of the public to feel any kind of panic and the supply of various networks will be improved in days to come.”
As far as government departments and Central PSUs are concerned, he said they have been advised to carry out all payments online and resort to cash withdrawal only in totally unavoidable situations.
In order to make transaction through cards cheaper, Das said RBI has asked National Payments Corporation of India to waive its various transaction charges. Similarly, banks have been advised to waive debit and credit card charges.
He also said the government yesterday extended use of old defunct Rs 500 and Rs 1,000 notes for paying household utility bills, fuel, taxes and fees and purchases from cooperative stores till November 24.
The earlier deadline was November 14 midnight. Many decisions to increase cash supply were taken after the situation was reviewed by Prime Minister Narendra Modi last night in a highlevel meeting that was attended by the Home Minister, Finance Minister, Minister of Coal and Power and Minister of State for Finance.
The meeting was also attended by RBI Governor and Deputy Governor R Gandhi, apart from senior Finance Ministry officials.
Das said the focus of the government is to activate all channels of distribution to ensure that cash is dispensed to the public.
“So the focus is further strengthening and activation of the network of Business Correspondents, the network of post offices, ATM networks and the network and reach of the banking system, activation and widening the facility of epayment and finally great emphasis… is given on improving public convenience,” he said.
Talking about relaxation effected by the government yesterday, Das said the cap for exchanging the now defunct Rs 500 and Rs 1,000 rupee notes has been increased from Rs 4,000 to Rs 4,500 per day.
The weekly limit of Rs 20,000 for withdrawal from bank counters has been increased to Rs 24,000. The maximum limit of Rs 10,000 per day on such withdrawals has been waived.
Also, the last date for submission of the annual life certificate for government pensioners, which is submitted in November every year, has been extended up to January 15, 2017.
Das clarified that the increase in withdrawal limit of Rs 2,500 from ATMs is only valid for recalibrated machines which will dispense one high security Rs 2,000 note and rest in the lower denomination.
To eliminate hardship, banks have been advised to make arrangements for separate queues for senior citizens and physically handicapped. Separate queues will also be arranged for exchange of cash and transactions against bank accounts.
Within three four days, the banking system has handled about 18 crore transactions.
With regard to tax implications, Das said cash deposit up to Rs 2.5 lakh would not be looked into but higher deposits would be examined by the authorities
VidyaSunil & Associates is into practice of Tax Complaince, Audit, Accounts , Corporate / Business Finance & Outsourced CFO Services.
Advise for contacting VidyaSunil & Associates;
E Mail ID : firstname.lastname@example.org
Cell No. : +91 9739834819