As public patience withers away, measures to keep troubles at bay continue to trickle in bits and pieces; new ones include 60-day window for repayment of loans, easing of withdrawal norms for overdraft, cash credit accounts; sale of seeds to farmers for old notes
NEW DELHI: The government escalated its firefighting measures even as the opposition parties, in tandem, intensified their attack of demonetisation of Rs 500 and Rs 1000 notes. As public patience continued to wither, Monday’s announcements were an attempt to console every section of the society by giving them some basic relief. Middle-class borrowers, traders, farmers and even farm-produce sellers were included.
Loan Payments: The Reserve Bank of India provided a 60-day window for repayment of housing, car, farm and other loans worth up to Rs 1 crore. The measure was announced as normal banking services have been crippled post demonetisation. The loan payment extension is also applicable to working capital accounts, term loans, loans taken from NBFCs, payable between November 1 and December 31. The central bank also assured that the credit score of customers, which is key to ensure further borrowing, would not be affected. However, the bank also made it clear that this relaxation should not delay the identification of bad loans.
Cash Withdrawal: The Bank also relaxed cash withdrawal norms, primarily for small traders. According to the new rules, overdraft and cash credit account holders would be allowed to withdraw a maximum of Rs 50 thousand a week. Earlier, this rule applied only to current account holders and traders registered with Agricultural Produce Market Committee.
This however, is not applicable to personal overdraft accounts.
Relief for Farmers: The government has also allowed farmers to use the demonetised currency notes to buy seeds from State and Central government outlets with the upcoming rabi season in mind. Reports suggest that only one-third of the total cultivable area in the country have so far been sown due to cash crunch. With cooperative banks not allowed to exchange notes, and with new currency still being scarce in rural areas, farmers are one of the worst hit segments.
Chaos Continues: Despite the measures, the situation is still far from the ‘business as usual’ scenario. The RBI claimed to have received Rs 5.11 trillion in bank deposits till November 18. As a result, interest rates of fixed deposits were slashed and bankers predict a further cut in rates on deposits. However, despite the existing currency crunch, Rs 1 trillion has already been withdrawn from banks by the public, says RBI. If the trend continues, a huge chunk of money might flow out of banks as currency crunch eases, warn experts. In turn, this could lead to volatility in borrowing and lending rates, spiralling into an era of economic uncertainty.