Limit will not apply to accounts compliant with KYC, says RBI.

The Reserve Bank of India on Wednesday rolled back the restriction it imposed on people seeking to deposit Rs. 5,000 or more of the scrapped Rs. 1,000 and old Rs. 500 notes with immediate effect.

The rollback, applicable to accounts compliant with KYC (Know Your Customer), came just two days after the central bank notified the rule.

On Monday, the RBI said deposits exceeding Rs. 5,000 in a bank account would be “received for credit only once during the remaining period till December 30, 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.”

On Wednesday, it said that “on a review,” banks were advised that the restrictions would not apply to accounts compliant KYC. For accounts not compliant with KYC, it limited deposits of withdrawn banknotes to Rs. 50,000.

Monday’s circular, which also directed banks to preserve the customer’s explanation to facilitate an audit trail at a later stage, triggered a furore over the sudden decision to restrict the return of the withdrawn currency almost 10 days prior to the originally announced deadline of December 30.

Finance Minister Arun Jaitley on Tuesday clarified that those depositing the demonetised currency for the first time would face no questioning from bank officials.

Besides Opposition politicians, the All India Bank Officers’ Convention panned the rule. The bank officers sought revocation of the December 19 notification, citing high amounts of stress it was causing to bank officials and the physical harm they were being placed under.

The Prime Minister’s November 8 announcement on the withdrawal of legal tender status for the old Rs. 500 and Rs. 1,000 notes specified December 30 as the deadline for deposit of the notes.