The government and Reserve Bank of India, on Monday, announced new measures to ease the public from their liquidity crunch.
Daily activities and business is still disrupted three weeks after Prime Minster Narendra Modi's televised announcement of the demonetization of Rs 500 and Rs 1000 notes. On Monday, the Reserve Bank of India (RBI) as well as the Centre announced a few measures to ease the cash crunch of the public.
1) Additional 60 days for loan repayment:
In order to ease the repayment process for small borrowers, the RBI announced a 60-day loan extension for running working capital accounts/ crop loans, term loans including housing and agriculture loans for loans worth up to Rs 1 crore. This facility is also extended to loans sanctioned by banks to Non Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs), Housing Finance Companies, Primary Agricultural Credit Societies (PACs) and by State Cooperative Banks to District Cooperative Central Bank (DCCBs). This facility is applicable to loans payable between November 1 and December 31, 2016.
2) Withdrawal limit to perform and celebrate weddings:
In order to smoothen the celebration of weddings, RBI announced a higher limit of cash withdrawal up to Rs 2,50,000 from deposit accounts to meet wedding related expenses. The apex bank, however, urged banks to encourage families to incur expenses through non cash means and strictly use cash for those expenses that can only be met through the cash payment mode. This facility is only applicable for those weddings on or before December 30, 2016 and the withdrawals are permitted from accounts which are fully compliant to the Know Your Customer (KYC) norms. The amount can be withdrawn by either of the parents or one of persons getting married. Furthermore, RBI said the cash withdrawn should be used only to make payment to those persons who do not have bank accounts and the names of such recipients should be mentioned while applying for withdrawal of the cash.The application for withdrawal should also provide names of bride and groom, their identify proofs, addresses and date of marriage.
3) Group-C government employees get Rs 10,000 cash in advance:
Government Group-C employees received Rs 10,000 cash as an advance of their salary for the month of November. Employees under this group perform operative tasks and render clerical assistance in ministries and field organisations. Reuters reported that atleast 1,000 employees received the advance cash in the Home Ministry predominantly in Rs 2,000 and Rs 100 denomination.
4) Withdrawal of Rs 50,000 cash extended to overdraft and cash credit accounts:
The Reserve Bank of India, on its website, announced that the weekly cash withdrawal limit of Rs 50,000 has been extended to overdraft and cash credit accounts. Earlier, this facility was only applicable for current accounts that have been operational for the last three months and more. Now, holders of current/ overdraft/ cash credit accounts can now withdraw up to Rs 50,000 a week and will be disbursed mainly in Rs 2,0000 denomination bank notes. However, this extended limit is not applicable for personal overdraft accounts.
5) Withdrawal limit for farmers and traders:
The central bank announced that farmers may be allowed to withdraw cash up to Rs 25,000 per week from their loan, including Kisan Credit Limit or deposit accounts. In a relief for traders too, RBI extended the cash withdrawal limit to Rs 50,000 for traders registered with Agricultural Produce Market Committee (APMC) markets/mandis, provided their accounts are compliant with KYC norms and are operational for the last three months or more.
6) Banks will deploy micro ATMs to ease cash crunch for weavers and artisans:
Reuters reported that banks will deploy micro ATMs at handloom-handcrafts clusters to smoothen the procedure for them to buy raw materials through Aadhar-enabled payment system. This decision was taken by Union textiles minister Smriti Irani with banks officials where she requested banks to reach out to the artisans and weavers and apprise them on demonetization, besides making arrangements to make cash available to them.
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