Why Jan Dhan withdrawal limit is discriminatory

RBI’s Jan Dhan withdrawal guidelines do not mention what is to be done with other bank accounts, where there were deposits before demonetisation was announced


RBI talks about farmers, rural account holders, it must be noted that a significant chunk of accounts under the Jan Dhan scheme belong to urban customers
RBI talks about farmers, rural account holders, it must be noted that a significant chunk of accounts under the Jan Dhan scheme belong to urban customers

Mumbai: As the central bank tries to limit the fallout of the government’s demonetisation exercise, its measures are increasingly becoming discriminatory in nature.

On Wednesday, the Reserve Bank of India (RBI) announced that it will limit withdrawals for Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts holders to Rs10,000 per month, if the account is compliant with know-your-customer (KYC) requirements.

These guidelines, which are part of daily-evolving guidelines announced by the RBI, come in the wake of allegations that Jan Dhan accounts are being used to deposit black money.

The banking regulator has been clear that this move is aimed at protecting the “innocent farmers and rural account holders of PMJDY” from activities of money launders and legal consequences under the benami property transaction and money laundering laws.

In fact, in its guidelines on Wednesday, the RBI has also clarified that this is limited to accounts which have been funded by Rs500 and Rs1,000 notes since 9 November.

However, as the guidelines do not mention what is to be done with other bank accounts, where there were deposits before demonetisation was announced, it is likely that branch managers will seek to limit withdrawals.

As such, branch managers across the country have been enforcing their own limits on daily withdrawals. In the case of HDFC Bank, branch managers have set a daily limit of Rs6,000, while in certain branches of Indian Bank, customers are allowed to withdraw Rs24,000 if they have an account with the branch.

While the regulator talks about innocent farmers and rural account holders, it must be noted that a significant chunk of accounts under the Jan Dhan scheme belong to urban customers.

According to data available on the PMJDY website, as on 23 November, there are 256.8 million bank accounts under the scheme which was introduced in August 2014 as part of a financial inclusion drive launched by Prime Minister Narendra Modi. Among these, nearly 100 million accounts, or 39%, have been opened in urban areas.

This means that a Jan Dhan account holder in a city will be allowed to withdraw far lesser than the Rs24,000 per week allowed to other bank account holders, even though they have been standing in the same queue.

One big reason why these guidelines might be considered discriminatory is because the central bank says that Jan Dhan account holders may be allowed higher withdrawal limits once branch managers determine that the cause for withdrawal is a genuine one. In other words, people would need to seek approval of a third person to access their money.

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