THIRUVANANTHAPURAM: A bizarre restriction on over-the-counter withdrawal is causing hardship to individual savings bank (SB) account holders with the state treasuries. A maximum of only Rs 2 lakh can be withdrawn in cash by individual account holders, while institutional account holders are excluded from the limit.
The restriction’s been causing hardship to lakhs of account holders, including government employees and pensioners. Those who want to withdraw more are asked to transfer the balance to their SB accounts with banks. Ramakrishnan, a pension account holder in Kottayam, was a victim of the regulation.
"Recently, I had to withdraw Rs 4 lakh from my SB account to pay a hospital bill. The treasury transferred the balance amount to my bank account," he said. Since the amount was above the daily ATM limit, Ramakrishnan had to visit his bank to withdraw the money.
Sources with the Finance Department said the restriction was the result of a misinterpretation of the cash transaction rule in the Finance Act, which limits transactions to Rs 2 lakh.
“The law is not applicable for over-the-counter withdrawals, or else banks would have put in place a similar restriction. Apparently, the Finance Department approved the Treasury Department’s proposal without a second thought. There is no shortage of currency for the Treasury Department. Also, the restriction is not applicable for institutional accounts,” said a senior officer.
Interestingly, the restriction has come at a time when the government is going all-out to mobilize money by way of treasury saving deposits. All government employees are now compulsorily paid salary through Employees Treasury Savings Bank (e-TSB) accounts.
A special interest rate has also been announced for employees and pensioners who would retain a fixed amount in their account. The treasuries director was not available for comment.