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RBI executes U-turn; withdraws deposit limits for KYC compliant accounts

The central bank, after reviewing its notification of November 19, has advised banks to withdraw the two conditions for fully KYC-compliant accounts.

Published: 21st December 2016 01:36 PM  |   Last Updated: 21st December 2016 02:03 PM   |  A+A-

Mobile ATM-Reuters

A man counts 100 Indian rupee banknotes after withdrawing them from a mobile ATM van in Guwahati, India, November 25, 2016. | Reuters

By Express News Service

CHENNAI: As outrage continues over the conditions imposed on deposits of old notes above Rs 5,000, the Reserve Bank executed a full u-turn on Wednesday.

In yet another notification, RBI said it has withdrawn the previous directive that anyone depositing more than Rs 5,000 in old demonetised notes will need to provide satisfactory explanations on source of the money and why it was not deposited earlier to at least two bank officers.

As criticism about the move mounted from all quarters, the RBI stated that it was modifying the rules -- all fully KYC-complaint account holders can deposit money in old currency without being questioned. However, the Rs 2.5 lakh stipulation still stands.

"On a review... , we advise that the provisions of the above (previous) circular at sub para (i) and (ii) will not apply to fully KYC compliant accounts," said the RBI.

It also removed the clause that required the depositor to be questioned if someone has more than Rs 5,000 in old notes. A deposit was originally supposed to be allowed only after the depositor satisfactorily answers why they couldn't put the money into their account earlier.

The two sub paras had stated that deposits amounting to more than Rs 5,000 can be credited to one's account only once until December 30, and credit would be allowed only if "satisfactory" explanations are provided to at least two bank officials.

The rollback comes amid intense criticism pointing out that both the finance minister and the Prime Minister had assured people repeatedly that there was time until December 30 to deposit old notes without hassle and to not rush to the banks.



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