The government on Monday raised cash-holding limits of “banking correspondents” and enhanced fund flow to post-offices as part of fresh steps to ease liquidity for millions hit by the unexpected “demonetisation” of Rs 500 and Rs 1000 notes last week.
The cash-holding limits of banking correspondents have been raised to Rs 50,000 per day. Banks have been given the flexibility to raise the limit further in appropriate cases.
There are 1.2 lakh such correspondents in the country with strong rural presence. Until now, each of these correspondents used to have different cash holding limits depending on the rules that their banks set.
Also, these correspondents can withdraw funds from their respective banks multiple times, from only once currently, economic affairs secretary Shaktikanta Das told a news conference.
Banking correspondents are persons empowered by the banks to officially represent them to carry out a host of services.
The activities include collecting deposits, exchanging old notes, disbursal of small loans, loan recovery, interest collection and pension products among others.
Likewise, the supply of cash to branch post-offices will be enhanced, Das said.
There are about 1.3 lakh branch post-offices in India that have been empowered to exchange and collect deposits of the old demonetised Rs 500 and Rs 1000 notes.
“The banking correspondents and post-office network together have 2.5 lakh banking points,” Das said.
These decisions were taken during a review that meeting chaired by Prime Minister Narendra Modi on Sunday that went well past midnight.
“The focus of the government is to activate all channels whereas cash is given, and cash is dispensed,” Das said.
Das said that micro ATMs will be deployed throughout the country that will dispense cash against credit and debit cards. Government departments have been asked to use e-payment systems to ease cash demand.
A task force has been set up under Reserve Bank of India (RBI) deputy governor to oversee the cash supply situation and the recalibration of ATMs.
On Sunday the government raised daily cash withdrawal limits from ATMs to Rs 2500 from Rs 2000 and eased other rules.
The limit for exchanging old Rs 500 and Rs 1000 notes at bank and post-office counters have been raised from the existing Rs 4000 to Rs 4500.
The weekly limit of Rs.20,000 for withdrawal from bank accounts has been increased to Rs.24,000.
The existing daily cash withdrawal limit of Rs.10,000 from bank branches has been removed.
The exemption for using the old Rs 500 and Rs 1000 notes in government hospitals, petrol stations and notified milk vends have bee extended till November 24 midnight.
The issuance of the new series of the Rs 500 notes has already commenced.
The government on November 8 scrapped Rs 500 and Rs 1000 notes as part of the strategy to clamp down on India’s bustling parallel cash economy.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
