Old Rs. 500 and Rs. 1,000 notes, scrapped last week in a sudden announcement by Prime Minister Narendra Modi, will be accepted at government hospitals, petrol stations and toll booths till November 24, the government announced on Monday morning, extending the deadline for the second time amid a nationwide scramble for cash.
The government has also increased the limit on cash withdrawals from bank accounts.
On Sunday, the government launched new Rs. 500 notes, which is expected to ease pressure on banks and improve liquidity in the market.
1. The government has also increased the daily limit of withdrawal from ATMs from Rs. 2000 to Rs. 2500 and exchange limit at banks from Rs. 4,000 to Rs. 4,500.
2. Banks have been asked to raise the weekly withdrawal limit to Rs. 24,000 and scrap the daily cap.
3. Banks will also have separate queues for senior citizens and people with disabilities.
4. Many banks are shut today for Guru Nanak’s birth anniversary, which meant longer queues in parts of India on Sunday and an overnight hunt for working ATMs for many.
PM Modi held a meeting after midnight on Sunday to review the demonetization of the two highest currency notes, a move to bring billions in black or untaxed money into the mainstream economy and check terror funding. Union Finance Minister Arun Jaitley and the Deputy Governor of the Reserve Bank of India were at the meeting.
Since last week, long queues at banks and ATMs have become a staple for millions rushing to replace banned notes – the deadline is December 30 – or withdraw valid currency. The banned rupee notes made up more than 80 percent of the currency in circulation, leaving millions without cash and threatening to bring much of the cash-driven economy to a halt.
Of two lakh ATMs across the country, only 60 per cent are disbursing cash. Many of the machines have to be re-calibrated for the new Rs. 2,000 notes.
The Reserve Bank of India has urged people to not withdraw cash repeatedly and hoard it. The nation’s largest bank, the State Bank of India, has reported deposits worth Rs. 75,945 crore by Sunday evening.
In a series of public meetings on Sunday, PM Modi said the nation had elected him to fight corruption and he was ready to do even though he faced a threat to his life. “I know the forces up against me, they may not let me live… they may ruin me because their loot of 70 years is in trouble, but I am prepared,” he said in an emotional speech in Goa.
Opposition parties have banded together against the demonetization, with the Congress and Arvind Kejriwal accusing PM Modi of leaving ordinary people in the lurch. The Congress and Bengal Chief Minister Mamata Banerjee’s Trinamool will meet today to plan a united attack in Parliament. Ms Banerjee yesterday spoke to arch rival CPM’s Sitaram Yechury.
Analysts have broadly welcomed the move, saying consumer spending will likely dip in the short term as the new notes make their way into circulation but it will be a boost to the GDP in the long term.