India to continue to regulate ATM, bank withdrawals

India will continue to control how much money people can withdraw from ATMs and banks after the end of a deadline to exchange or deposit its devalued high-value currency bills.
According to a statement issued by the central bank late Friday, the daily limit on ATM withdrawals will go up to 4,500 rupees ($66) from 2,500 ($37) rupees, but the weekly cap on withdrawals from bank accounts will remain at 24,000 rupees Saturday onward. It was not clear how long the limits would be in place.
In a surprise announcement Nov. 8, Prime Minister Narendra Modi said India was withdrawing 500- and 1000-rupee bills as legal tender in order to crack down on tax evasion and corruption.
He also said the move was intended to push India away from its massive dependence on paper money toward digital transactions.
The deadline for exchanging or depositing the old currency in bank accounts passed Friday.
The prime minister was slated to make a televised New Fifty days after the withdrawal of more than 80 percent of India’s currency, cash remains in short supply and everything from retail sales to wholesale markets have experienced turmoil in a country where the vast majority of people still earn and spend in cash.
While hundreds of millions of Indians use cash transactions to hide their wealth and avoid taxes, less than 3 percent of the population pays income taxes. The vast majority of Indians use cash simply out of habit or because of poverty and a lack of easy access to banks.
The devaluation of the old high-value bills has also caused hardships to millions of middle class Indians who do have bank accounts and debit cards because the government has not been able to print enough 2,000- and 500-rupee bills to meet the demand. Long lines continue to wind outside ATMs and banks often run out of cash within a few hours of the start of the workday.
Experts say only about 40 percent of the country’s ATMs have so far been reset to fit the changed size of the new notes.

Source: Arab News