RBI Modifies cash withdrawal rules

Latest update: November 22,2016.

RBI has further amended the cash withdrawal rules which are as under

1. Cash withdrawal for purpose of celebration of wedding:

The drawer of money shall submit a detailed list of persons to whom the cash withdrawn is proposed to be paid indicating the purpose where the amount is Rs.10000/- and more, together with a declaration from such persons that they do not have a bank account.

2. Making cash available for Rabi Crop Season

It is estimated that about ₹ 35,000/- crore would be required by the DCCBs for sanction and disbursement of crop loans to the farmers at the rate of ₹ 10,000/- crore per week. NABARD is asked to utilise its own cash credit limits up to about ₹ 23,000 crores to enable the DCCBs to disburse the required crop loans to PACS and farmers. Since these loans will be disbursed in cash to facilitate farming-related expenses, banks with currency chests are asked to ensure adequate cash supply to the DCCBs and RRBs. Adequate cash supply should also be ensured for rural branches of all commercial (including RRBs). Further, commercial banks in rural areas, bank branches located in APMCs, are to be provided with adequate cash to facilitate smooth procurement.

3. Controlling Fraudulent Practices

In view of complaints received by RBI that at certain places, few bank branch officials, in connivance with some miscreants, are indulging in fraudulent practices while exchanging SBNs in cash / accepting SBN deposits into account, Banks are advised to ensure that such fraudulent practices are stopped forthwith through enhanced vigilance and take stern action against officials involved in such activities. The bank branches are required to maintain proper record of the following;

The record should show (i) the denomination-wise details of Specified Bank Notes and aggregate value of non-SBN note deposited in the account of each deposit or loan customer from November 10, 2016, onwards (ii) Customer-wise and denomination-wise record in respect of SBNs exchanged by walk-in and regular customers.

Banks were asked to be in readiness to provide these details at short notice.

4. Enhancement in PPI limits:

The limit of semi-closed Prepaid Payment Instrument (PPI) has now been enhanced from ₹ 10,000/- to ₹ 20,000/- . (The total value of reloads during any given month shall also not exceed ₹ 20,000/-).

5. PPI to merchants:

Merchants shall give a self-declaration in respect of their merchant status and details of their own bank account, which shall be kept on record by the issuer. PPIs can be issued to such willing merchants only after due verification and validation of their bank account details. Inflows of funds / credit to such PPIs shall emanate only from sale transactions of the merchant. The maximum value in these PPIs shall not exceed ₹ 20,000/- at any point of time. Funds transfer from such PPIs is permitted only to the merchant’s own linked bank account and up to an amount of ₹ 50,000/- per month, without any limit per transaction. PPI issuers shall clearly identify such PPIs in their systems for the purpose of maintenance of escrow, reporting and MIS requirements.

Earlier notifications:

On a review, RBI has brought certain modifications in the limits for withdrawal from bank accounts  as under:

(a) For farmers (b) Traders registered with APMC markets/Mandis  (c) Marriages

The banking regulator RBI has reviewed cash withdrawal from banks and accordingly made certain modifications in withdrawal of cash from the accounts for following categories of accounts.

• Farmers may be allowed to draw up to ₹ 25000/- per week in cash from their loan (including Kisan Credit Card limit) or deposit accounts subject to their accounts being compliant.
• The current account holders are presently permitted to withdraw Rs.50000/- in a week from their accounts. The same facility is now extended to traders registered with APMC markets/Mandis subject to compliance with extant KYC norms.
• The parents of wards have been allowed higher limits of cash withdrawals from their account to meet wedding expenses. However, RBI advised banks that they should encourage families to incur wedding expenses through non-cash  means viz. cheques /drafts, credit/debit cards, prepaid cards, mobile transfers, internet banking channels, NEFT/RTGS, etc.

The Cash withdrawal for marriages shall be subject to the following conditions;

A maximum of ₹ 250000/- is allowed to be withdrawn from the bank deposit accounts till December 30, 2016, out of the balances at credit in the account as at close of business on November 08, 2016. Withdrawals are permitted only from accounts which are fully KYC compliant. The amounts can be withdrawn only if the date of marriage is on or before December 30, 2016. Withdrawals can be made by either of the parents or the person getting married. (Only one of them will be permitted to withdraw). Since the amount proposed to be withdrawn is meant to be used for cash disbursements, it has to be established that the persons for whom the payment is proposed to be made do not have a bank account. The application for withdrawal shall be accompanied by following documents.

• An application as per format provided by RBI.
• Evidence of the wedding, including the invitation card, copies of receipts for advance payments already made, such as Marriage hall booking, advance payments to caterers, etc.
• A detailed list of persons to whom the cash withdrawn is proposed to be paid, together with a declaration from such persons that they do not have a bank account. The list should indicate the purpose for which the proposed payments are being made.
• Banks shall keep a proper record of the evidence and produce them for verification by the authorities in case of need. The scheme will be reviewed based on authenticity/ bonafide use thereof.