With no end in sight for the cash crunch faced by millions, the government has eased restrictions on withdrawal of alternate currency and extended by 10 days deadline for use of the defunct 500 and 1000 rupee notes for paying utility and fuel bills.
The Finance Ministry took a series of steps to increase cash supply in the system, including introducing a new 500 rupee note in the recalibrated ATMs. About 1.3 lakh branch post offices will be stacked with cash and hundreds of new micro cash machines will be installed across the country.
Also, a Task Force was set up to expedite process of recalibration of ATMs as well as draw up action plan and ensure implementation of this action plan for quick changeover to enable them to dispense new bank notes of Rs 500 and Rs 2000.
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The measures followed ever increasing queues at banks growing even after nearly a week of the government decision to withdraw higher denomination notes. Today being a bank holiday in northern and western India, long queues are expected tomorrow with people wanting to withdraw money or swap the old 500 and 1000 rupee notes.
About half of the ATMs have not yet started functioning and wherever were operational ran out of cash in no time.
Economic Affairs Secretary Shaktikant Das said the government has also raised cash withdrawal limit of at least three-month old current accounts to Rs 50,000 per week and ATMs would start dispensing new 2000 rupee notes within two days.
The government 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.
While withdrawing Rs 500 and Rs 1,000 notes from the intervening night of November 8-9, the government had allowed use of the old currency at government hospitals, railway ticketing, public transport, airline ticketing at airports, milk booths, crematoria/burial grounds and petrol pumps for 72 hours.
This list was later expanded to include payments for metro rail tickets, highway and road toll, purchase of medicines on doctor prescription from the government and private pharmacies, LPG gas cylinders, railway catering, electricity and water bills and ASI monument entry tickets.
As banks struggled to give alternate currency, the deadline was extended by another 72 hours. That deadline was to end at midnight tonight, but has now been extended till November 24, he said.
Old currency can also be used for purchases at consumer cooperative stores like Kendriya Bhandar with valid ID proof as also for paying court fee.
But payments towards utility bills will be restricted to only individuals or households for arrears and/or current bills. No advance payments will be allowed.
With banks receiving Rs 2 lakh crore in deposits in first four days, the government raised limits on withdrawals and exchange of old banknotes.
The daily limit on withdrawals from ATMs has been raised to Rs 2,500 from Rs 2,000 earlier while the weekly cap has been hiked to Rs 24,000 from Rs 20,000. Also, the restriction of daily withdrawal of Rs 10,000 through cheque or withdrawal slip has been dispensed away and such drawals would be within the overall Rs 24,000 a week limit.
Old notes of value up to Rs 4,500 a day can now be exchanged as against Rs 4,000 limit previously.
The notes withdrawn accounted for 86 per cent of the currency in circulation and Das said the government is stepping up efforts to ensure banknotes of all denominations are available at banks.
Banks remained opened across the country through the weekend to deal with the rush.
"The ATMs are progressively getting recalibrated. As and when they are recalibrated, the cash limit of such ATMs will stand enhanced to Rs 2500 per withdrawal. This will enable dispensing of lower denomination currency notes for about Rs 500 per withdrawal. Other ATMs which are yet to be recalibrated, will continue to dispense Rs 2000 till they are recalibrated," he said.
Adequate cash will be made available with District Central Cooperative Banks (DCCBs) to facilitate withdrawal from existing accounts. The cash withdrawal limits for banks will apply in case of DCCBs also.
"There is enough cash in the system to meet the requirement. Members of the public are, therefore, advised not to have any sense of panic," he said.
Prime Minister Narendra Modi reviewed the supply and availability of currency notes late last evening in a meeting that went on till past midnight.
It was attended among others by Home Minister Rajnath Singh, Finance Minister Arun Jaitley and Urban Development and I&B Minister Venkiah Naidu.
It was also attended by the RBI Governor Urjit Patel.
"The Meeting took stock of the current status of supply of cash and took certain decisions to further activate the dispensing of cash through the networks of banking correspondents, post offices, ATMs, banks and E-payment systems," an official statement said.
The cash holding limit of banking correspondents has been raised to Rs 50,000 and banks will replenish the cash with them multiple times in a day as per requirement.
Banking correspondents have wide presence in the rural areas. Totally there are 1.2 lakh BCs in the country. The above decisions will facilitate wider reach in the rural areas for exchange and withdrawal of cash from Bank Accounts.
