Banks will continue to see huge rush. (Express Photo) Banks will continue to see huge rush. (Express Photo)

In the first indication that restrictions on cash withdrawal may not be removed in one go after December 30 and will instead be phased out gradually, a top government official Thursday said that the Centre will start easing restrictions when a significant amount of the new currency is reintroduced into the system.

The indications are that the government could keep the restrictions in place till over three-fourths of the Rs 15.44 lakh crore that was circulating before November 8 is fully replenished, the official said.

The RBI has infused more than Rs 5 lakh crore of currency notes into the banking system since November 8. At a separate briefing Thursday, Economic Affairs Secretary Shaktikanta Das said that 50 per cent worth of the withdrawn currency would be in circulation by “the end of the month”.

“Roughly whatever has been taken out… by the end of the month, about at least 50 per cent of the notes which were in circulation, which were actually in circulation, at least 50 per cent of the notes would have been supplied in another 10-15 days,” Das said. “Seized notes are also being put into circulation as soon as possible. How many notes have been seized, I don’t have the data immediately,” he said.

As of December 10, currency notes of Rs 500 and Rs 1,000 amounting to Rs 12.44 lakh crore had been returned to RBI and the currency chests — these notes accounted for 86 per cent or Rs 15.44 lakh crore of bank notes in circulation as on November 8.

Going by the rate at which fresh currency has been replenished so far, it could conservatively take up to the second week of January to replenish three-fourths of the total withdrawn currency.

The official who spoke earlier — he did not wish to be named — said the restrictions on cash withdrawals will be first eased in case of cooperative banks and then for all scheduled commercial banks.

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On November 8, Prime Minister Narendra Modi had announced the withdrawal of Rs 500 and Rs 1,000 notes. Alongside the move, restrictions were placed on withdrawal over bank counters and at ATMs. The withdrawal limit from banks is currently Rs 24,000 a week, including a maximum of Rs 2,500 that can be withdrawn from ATMs every day.

The official said the restrictions will be withdrawn once the situation stabilises. “Remonetisation has substantially happened and as and when it (stabilisation) happens, restrictions will be eased,” he said.

Das, in his briefing, however, cautioned that there are a “lot of areas where we feel that there could be double counting. We have identified those areas and we have requested the RBI and the banks to double-check. So a process of correction, checking, counter-checking of the figures… the due diligence is being done to see that there is no double-counting of the figures. So that process is on”.

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