Another demonitisation U-turn: RBI rolls back restrictions imposed on depositing ₹5000 for KYC-compliant account

December 21, 2016, 3:50 pm
Another demonitisation U-turn: RBI rolls back restrictions imposed on depositing ₹5000 for KYC-compliant account
INDIA
INDIA
Another demonitisation U-turn: RBI rolls back restrictions imposed on depositing ₹5000 for KYC-compliant account

Another demonitisation U-turn: RBI rolls back restrictions imposed on depositing ₹5000 for KYC-compliant account

In a yet another U turn , the Reserve Bank of India (RBI) rolled back the restrictions it imposed on bank deposits exceeding ₹5000 in old notes for KYC compliant account holders.

The fresh notification by the RBI comes in, after it has stated on Monday that an individual can deposit more than ₹5000 through abolished notes only once till 30 December, following severe backlash.

It has also said that such deposits can be made only after showing cause for the delay in the deposit. Limiting the old note deposits to ₹5000, the central bank has said that the exceeding sum will come under scrutiny.

Tenders of specified bank notes (SBN) in excess of ₹5,000 into a bank account will be received for credit only once during the remaining period till 30 December 2016
RBI Statement 

It also has said unless customers give satisfactory reply to the bank officials for why they could not deposit the abolished currency so far, they can not deposit its money.

However in the fresh notification, the RBI said the money deposited would only be credited to KYC compliant accounts. The deadline for depositing old denominations of ₹500 and ₹1000 is 30 December.

Clarifying the new decision, Finance Minister Arun Jaitley said that the repeated deposits by same account would attract questions from banks, while the deposits made in one go will not be questioned.

Meanwhile, the fresh directive from the central bank has drawn flak from multiple corners since it changed its decision on a regular basis.

“RBI is changing rules like the PM changes his clothes,” Congress vice-president Rahul Gandhi tweeted.

Full text of the RBI circular issued on Wednesday:

“Please refer to our circular DCM (Plg) No. 1859/10.27.00/2016-17 dated December 19, 2016. On a review of the above, we advise that the provisions of the above circular at sub para (i) and (ii) will not apply to fully KYC compliant accounts.”Here is the first circular:“On a review of the provisions ii, iii and iv at C of Para 3 dealing with credit of the value of SBNs into bank accounts it has been decided to place certain restrictions on deposits of SBNs into bank accounts while encouraging the deposits of the same under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016 as indicated below:Tenders of SBNs in excess of ₹5000 into a bank account will be received for credit only once during the remaining period till 30 December 2016. The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in CBS to that effect so that no more tenders are allowed.Tenders of SBNs up to ₹5000 in value received across the counter will allowed to be credited to bank accounts in the normal course until December 30, 2016. Even when tenders smaller than ₹5000 are made in an account and such tenders taken together on cumulative basis exceed ₹5000 they may be subject to the procedure to be followed in case of tenders above ₹5000, with no more tenders being allowed thereafter until 30 December 2016.It may also be ensured that full value of tenders of SBNs in excess of ₹5000 shall be credited to only KYC compliant accounts and if the accounts are not KYC compliant credits may be restricted up to ₹50,000 subject to the conditions governing the conduct of such accounts.The above restrictions shall not apply to tenders of SBNs for the purpose of deposits under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016.The equivalent value of specified bank notes tendered may be credited to an account maintained by the tenderer at any bank in accordance with standard banking procedure and on production of valid proof of Identity.The equivalent value of specified bank notes tendered may be credited to a third party account, provided specific authorisation therefor accorded by the third party is presented to the bank, following standard banking procedure and on production of valid proof of identity of the person actually tendering, as indicated in Annex-5 of our circular cited above.”