RBI flip-flops on old note deposits

Mangalore Today News Network

New Delhi, Dec 22, 2016, DHNS: Amid widespread criticism, the Reserve Bank of India on Wednesday withdrew a norm mandating questioning of bank customers depositing more than Rs 5,000 in banned currency.

It also lifted a bar on deposits exceeding Rs 5,000 in banned notes more than once till December 30. Now, a KYC-compliant customer can deposit more than Rs 5,000 any number of times, with no questions asked.

Two sub-clauses of a circular were withdrawn within two days, as the government faced criticism from all quarters, including from within the BJP. Highly placed sources said the Centre asked the RBI to recall the rules with immediate effect.

According to a circular issued on Monday, anyone depositing more than Rs 5,000 in banned notes could do so only once before December 30, after giving a “satisfactory answer” to two bank officials.

Within hours, Finance Minister Arun Jaitley softened the blow, saying only multiple deposits would be questioned, and any amount of old currency deposited in one go would not be subject to questions.

The norm created confusion and hardship. Many of those who went to banks with more than Rs 5,000 were questioned by multiple officials. In fact, bank officials went strictly by the RBI circular, which said nothing about multiple deposits or first-timers.

After Jaitley, Law and IT Minister Ravi Shankar Prasad said the government would provide a ‘structured response to the RBI circular,’ adding to the confusion.

Up in arms, the Opposition reminded Prime Minister Narendra Modi of his November 8 televised address to the nation. Announcing the note ban, he had said no limits would be placed on old-currency deposits from November 10 to December 30.