The Reserve Bank of India yesterday imposed fresh restrictions on deposits of banned currency notes into bank accounts, days before the December 30 deadline to swap old rupee bills for new ones.
Prime Minister Narendra Modi unleashed chaos last month with his shock move to withdraw high-denomination Rs500 and Rs1,000 notes from circulation, in an effort to tackle widespread corruption and tax evasion.
The decision triggered a cash crisis, with long queues materialising outside banks across the country as people tried to get rid of their old notes – some 86% of all bills in circulation – ahead of next week’s deadline.
Yesterday the RBI said that people would now only be allowed to make a single deposit amounting to more than Rs5,000 before the deadline, and would be required to explain why they hadn’t deposited the money earlier.
“Tenders of Specified Bank Notes (SBNs) in excess of Rs5,000 into a bank account will be received for credit only once during the remaining period till December 30,” the central bank said.
The finance ministry explained why it took the new step.
“It is expected that, by now, most people would have deposited such old notes. Keeping this in view and to reduce the queues in the banks, it has been decided that amounts exceeding Rs5,000 in old notes can be deposited only once between now and December 30,” the ministry said.
“We want people to deposit old notes at one time. After December 30, things will improve at a great speed,” Minister of State for Finance Arjun Ram Meghwal told reporters here.
Opposition parties attacked the move, which comes as many people are already facing a shortage of cash with ATMS running dry as thousands throng to them.
“There are elderly, housewives, poor and students who were waiting for the long queues to become smaller,” the opposition Congress Party spokesman Randeep S Surjewala told reporters in Delhi.
“This new rule shows that Modi government has no direction or clear policy”, he added.
Congress vice president Rahul Gandhi said the government has taken blood out of the veins of 99% Indians with its demonetisation decision.
At a rally in poll-bound Uttar Pradesh, Gandhi stopped people from hurling invective against Modi, saying he is the prime minister and “we must not say ‘murdabad’ (down with) for anyone”.
He said the Congress would have assisted any move of the government to weed out corruption and black money from India but “the decision on demonetisation was neither against corruption, nor against black money”.
He said: “We want to root out corruption from India. If the government takes any decisions against corruption, we will support it 100%.”
The Congress leader said the decision to pull out nearly 86% of the country’s total currency in circulation “was against the poor people of India”.
But Modi has repeatedly defended the scheme, saying it will bring billions in black money back into the formal system.
“I said this at the start, and will repeat again today, these difficulties that you have been facing will start easing after December 30,” he said yesterday, addressing a political rally in Uttar Pradesh.
The prime minister also hinted at more tax raids, arrests and bank scrutiny in the coming days.
In the past few weeks several people have been arrested in surprise raids, revealing the role of bank officials who have allegedly facilitated the illegal exchange of old currency notes.
“Some people thought that they could get away by simply depositing their unaccounted (black) money in the banks. They underestimated the government.
They are trapped and will now be caught using technology,” Modi warned.
People queue up outside an ATM in New Delhi yesterday. There was no respite in sight for the cash-strapped people.
