Govt may do away with cash exchange gradually
The government may withdraw the cash exchange facility gradually and instead ask holders of Rs500, Rs1,000 banknotes to deposit in their bank accounts
New Delhi: After limiting exchange of defunct currency notes to a maximum of Rs2,000, the government may withdraw the facility gradually and instead ask holders of such currency to deposit in their bank accounts.
The government had on 8 November demonetised Rs500 and Rs1,000 banknotes and asked the holders of such notes to either deposit them or exchange in banks between 9 November and 30 December. Through this, it has taken out Rs14 lakh crore or 86% of the currency out of the market.
The limit for currency exchange was initially fixed at Rs4,000 per day, but was later hiked to Rs4,500 a day for all the entire 50-day period. But on Friday, the government more than halved it Rs2,000 per person. The exchange facility is available only once during this period.
The government had allowed exchange facility in the beginning to ensure liquidity remains in the market, people familiar with the matter said.
“About 60% of the liquidity that we wanted to maintain in the market post demonetisation has already been achieved. As and when the remaining is achieved, the exchange facility could be phased out,” an official said.
While making the demonetisation announcement on 8 November, the government had said it will review the limit for cash exchange after 15 days.
People familiar with the matter said that the government is waiting for new currency to get into the system first and as and when there is near adequate circulation, the exchange facility could be withdrawn.
The exchange facility, according to officials, was being misused by some to exchange their black money.
Following this, the government earlier this week decided to apply indelible ink on the right hand index finger of persons who are getting notes exchanged but the ink has only reached metro cities.
The reducing currency exchange limit “is mainly to enable larger number of people to reach the counter... We find that many people are not able to reach the counter and same persons are visiting the counter multiple times and other people are not getting the benefits,” economic affairs secretary Shaktikanta Das had said.