The Indian central bank apparently has woken up to the uncomfortable political territory it is being pulled into with each passing day. After a drubbing from Indian public and Indian Parliament, it even got a hearing from Election Commission.
So it has decided to remove restrictions on certain withdrawals and restore to status quo before 8 NOV 2016:
In a review of the pace of remonitisation, it has been decided to partially restore status quo ante as under:
- Limits placed vide the circulars cited above on cash withdrawals from Current accounts/ Cash credit accounts/ Overdraft accounts stand withdrawn with immediate effect.
- The limits on Savings Bank accounts will continue for the present and are under consideration for withdrawal in the near future.
- Limits vide the circulars cited above placed on cash withdrawals from ATMs stand withdrawn from February 01, 2017. However, banks may, at their discretion, have their own operating limits as was the case before November 8, 2016, subject to 2 (ii) above.
So restrictions on savings bank account remain (Rs 24,000 per week??) and those on current accounts are done away with. Also restrictions on ATMs are withdrawn from 1 Feb 2017.
However, this is hardly enough. All these are just de jure announcements. De facto one continues to face trouble especially regarding the Rs 2000 note as no one is willing to change. This 2000 note clearly was and remains to be the most atrocious policy decision taken on 8 Nov 2016. There is no point if banks continue to give these high denomination notes which are useless anyway except for making large payments. You actually need a lot more Rs 100 and Rs 500 notes coming to the system to help Rs 2000 to circulate.
Infact, there is still time and government should either take back this Rs 2000 note in a “gradual fashion” or reintroduce Rs 1000 note.
The central bank has also not been sharing any data/information which has made it really difficult to assess the situation.