India to remove cash withdrawal limits

Central bank partially lifted limits for certain accounts earlier this month


Afp February 08, 2017
Central bank partially lifted limits for certain accounts earlier this month PHOTO: FILE

MUMBAI: Limits on cash withdrawals will be removed entirely from March 13, India's central bank said Wednesday, as it left interest rates on hold for the second time since a ban on high-value rupee notes.

The Reserve Bank of India capped cash withdrawals after Prime Minister Narendra Modi's shocking decision in November to take all 500 ($7.40) and 1,000 rupee notes out of circulation – 86% of the currency in the cash-reliant nation.

The ensuing cash crunch saw long queues outside banks and ATMs, which ran dry within hours and left many, especially in rural areas, without food or daily essentials.

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The central bank partially lifted limits for certain accounts earlier this month, but not for customers holding the more widely used savings accounts.

In a statement Wednesday, the bank said withdrawal limits would be nearly doubled from 24,000 rupees to 50,000 from February 20 before “the complete cap be removed on March 13, and there will be no limits to cash withdrawals”.

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The bank also said it was leaving interest rates unchanged at 6.25% for the second time since November's so-called “demonetisation”.

The bank has been under pressure to cut rates to stimulate the economy amid fears the cash ban had slowed growth.

The benchmark repo rate – the level at which it lends to commercial banks – would remain steady, the bank also announced, after it was cut to 6.25% in October.

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