Cash limits raised as Indian banks get $44b in deposits

New Delhi: India raised the limits on withdrawals and exchange of old banknotes after the government’s surprise move to ban high-denomination bills on November 8 resulted in customers across the country queuing for hours to deposit the old bills.
Banks have received Rs3 trillion ($44.4 billion) in deposits in the first four days, the Finance Ministry said in a statement late on Sunday. About Rs500 billion have been disbursed either from withdrawals or exchange of old banknotes, it said. The daily limit on withdrawals from cash dispensing machines has been raised to Rs2,500, while weekly cap has been increased to Rs24,000.
Prime Minister Narendra Modi on Sunday defended his move to withdraw 500-rupee and 1,000-rupee notes, which accounted for 86 per cent of money in circulation, as an important step in the fight against corruption and tax evasion, and urged people to bear the pain for 50 days and back the measure.
The government said it’s stepping up efforts to ensure banknotes of all denominations are available as banks, which remained opened across the country through the weekend, come under pressure to replenish the funds. About 180 million transactions have been handled by India’s banking system in four days through 5 p.m. on Sunday, according the finance ministry. The Reserve Bank of India on Sunday urged the public not to be anxious and avoid going to banks repeatedly to withdraw and hoard cash.
The government raised the limit of withdrawals from a current account held at banks to Rs50,000 per week in a move to help small businesses pay wages, Economic Affairs Secretary Shaktikanta Das said at a press briefing in New Delhi on Monday. The date to accept the old high-denomination bills at places such as government hospitals, utilities and fuel stations has been extended until November 24, he said.
Modi is seeking to fulfill his election promise of recovering illegal income, locally known as black money. The government will take more steps to curb tax evasion, including action against benami property, he said at an event in Goa on Sunday. Benami is property owned by someone but held in the name of a third party.
Even so, the cash crisis has seen people standing for hours in long lines to exchange the now-defunct notes, and political rivals of Modi’s Bharatiya Janata Party relaying images of the chaos on social media.
The shortage of banknotes is also hurting businesses. About 60 per cent of the truck fleet in the country is stranded on highways because of the cash crunch, according to Naveen Kumar Gupta, secretary general at the All India Motor Transport Congress, which represents operators of about 9.3 million goods carriers.
“While we are with the government on this issue of eliminating black money, but on the ground trucks are facing serious practical problems,” Gupta said in a telephone interview on Monday. “The daily withdrawal limit is low so we don’t have enough to provide drivers to meet daily needs like food.”