India’s citizens are now able to make unrestricted cash withdrawals, ending the period of cash rationing imposed on the country by Prime Minister Modi.
From Monday 13 March 2017, all cash withdrawal limits from Savings Bank accounts were withdrawn, allowing the citizens of India to withdraw cash freely.
The country has been through a period of demonetisation whereby the ₹500 and ₹1,000 banknotes where suddenly withdrawn from circulation, a move that wiped out 86% of India’s cash in circulation overnight. It was a move by the country’s Prime Minister as part of a crackdown on corruption and illegal cash holdings.
Though the restrictions have now been lifted, analysts do not expect a repeat of the cash crisis which saw hundreds of people queuing at banks and ATMs trying to withdraw cash. Since the demonetisation began on 8 November 2016, new ₹500 and ₹2,000 banknote denominations have been supplied back into the economy, resulting in the value of cash in circulation rising to around $158bn, according to an article by the Financial Times.
Even so, a number of banks have applied new fees to cash withdrawal and deposit transactions, believed to be part of continuing efforts to curb the demand for cash withdrawals made in the country.
Digital payments have sharply risen since the demonetisation began last November, peaking at Rs104 trillion in value and almost 1 billion in volume in December. Though the numbers have reduced slightly, today they still remain high. PM Modi has encouraged the use of digital payments in what was a largely cash dependent country.
Read the Reserve Bank of India’s Frequently Asked Questions regarding the demonetisation process.
