RBI does a U-turn on ₹ 5000 guideline for KYC-compliant accounts

RSTV Bureau

A man displaying Rupee one thousand notes after Central goverment order of demonetisation of 500 and 1,000 rupee Indian currency  in Srinagar on Wednesday.

The Reserve Bank of India has been forced to do a u-turn on its latest guideline with regard to demonetisation after a massive public outcry.

On Wednesday the central bank said no questions will be asked on deposits of old notes if the account is KYC (Know Your Customer) compliant, thereby modifying its own guideline. Even repeat deposits of any amount will be allowed in KYC-compliant accounts. Earlier on Monday, the RBI had said that those looking to deposit more than ₹ 5,000 in the old notes, can deposit only once in a particular account until December 30, and that too after providing an explanation.

After Monday’s directive there was a huge outcry among the people as many banks had refused to accept cash beyond ₹ 5000. Customers were also questioned about why they had failed to deposit the old notes earlier even when the deadline was valid until December 30.

People felt cheated because Prime Minister Narendra Modi in his address to nation on December 8 had assured every citizen that they can deposit the defunct notes of ₹ 500 and ₹ 1000 in banks until December 30, 2016.

However, customers with non-KYC accounts will be continue to be subject to harsh conditions imposed by RBI on December 19.

“The credit in such cases shall be afforded only after questioning tenderer, on record, in 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,” the RBI notification had said on Monday.

Consequently, Finance Minister Arun Jaitley had warned people that  repeat deposits would raise doubts.

“Today, there are no exemptions… Now, there is no further scope of earning old currency. So, those who have got old currency must go and deposit at one go… Therefore, if somebody goes everyday and deposit old currency, it raises suspicion. How is he getting everyday? As long as exemptions existed, there was scope for getting old currency. But once the exemptions have been lifted, if you have old currency, go and deposit at one go,” Jaitley had said.

(With inputs from PTI)