RBI removes ATM cash withdrawal limit from Feb 1, weekly limit of Rs 24000 to continue for now

A customer uses his card to withdraw money from an ATM in Jammu October 14, 2008. Indian shares held gains of 1.5 percent on Tuesday, led by Reliance Industries, but investors were circumspect and watchful after a sharp rebound this week on concerted action across the world to rescue the financial sector. REUTERS/Amit Gupta (INDIAN-ADMINISTERED KASHMIR) - RTX9J5L

MUMBAI: Eighty-five days after demonetisation was announced on November 8, savings bank account holders will be allowed to withdraw up to Rs 24,000 from ATMs from February 1, while all withdrawal limits have been waived for current account holders.
The RBI said the Rs 24,000 weekly withdrawal limit on savings accounts will continue for now but is being reviewed and could be scrapped in the near future.
RBI said all limits on withdrawal have been removed for current accounts, cash credit accounts and overdraft accounts with immediate effect. Small businessmen, who are issued ATM cards for their current accounts, can withdraw all their cash from ATMs. However, this would be subject to the prudential limit fixed by each bank for its customers.

Tax experts say that the withdrawal of limits raises the spectre of a banking cash transaction tax in the budget. Earlier, with the limits, a tax on withdrawals seemed less likely .
According to Navroze Dastur, MD at NCR India, the largest ATM company in the country, there has been a change in customer behaviour.

“Now Rs 1,900 is the magic number that everyone tries to withdraw from ATMs. Withdrawing this amount gives them three notes of Rs 500 denomination and four of Rs 100.”
Once the ATM runs out of notes of Rs 500 and Rs 100 denomination, activity immediately drops as customers are unwilling to accept notes of Rs 2,000 denomination.While there is no limit for current account holders, and a limit of Rs 24,000 for savings accounts RBI has said that banks can have their own operating limits as was the case before November 8, 2016. The RBI also said that banks should encourage customers to sustain the movement towards digitisation of payments, and switch over to non-cash modes.

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