No more explanation for deposts over Rs. 5000

Two days after the Reserve Bank of India (RBI) announced that those depositing more than Rs 5000 in old denominations would face questioning by bank officials, the bank has made a massive U-turn.

As per the latest circular, now people can deposit more than Rs 5000 in fully KYC compliant accounts.

HERE’S WHAT YOU NEED TO KNOW:

  • Old currency notes worth over Rs 5000 can only be deposited once per bank account till December 30, the Reserve Bank of India had said in a notification.
  • People depositing the old Rs 500 and Rs 1,000 in excess of Rs 5,000 will be questioned in the presence of at least two bank officials why this was not deposited earlier, the RBI said.

After much furor, the Reserve Bank of India has withdrawn its previous directive that said anyone depositing more than Rs 5,000 in old currency notes of Rs 500 and Rs 1,000 in their bank accounts will need to justify it to two bank officers.

The RBI has modified its rules announced on 19 December and has relaxed these rules for fully-KYC compliant bank accounts.

  • Now, all fully KYC-complaint account holders can deposit money in old currency without being questioned. But the Rs 2.5 lakh stipulation still stands.
  • RBI’s latest notification says, “On a review of the above, we advise that the provisions of the above circular at sub para (i) and (ii) will not apply to fully KYC compliant accounts.”
  • Sub para (i) and (ii) said that deposits exceeding Rs 5,000 in old notes will be permitted only with suitable explanation being provided to bankers.
  • The above guideline had come in for much criticism. It was pointed out that the Prime Minister and Finance Minister had assured the public on Nov 8 that old notes could be deposited till 30 Dec, 2016 and the guidelines issued on 19 December were not in line with those assurances.

This is 60th regulation by RBI since demonetisation was announced.

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