From RBI flip-flops to ATM queues, demonetisation tests Indians’ patience

More than a month has passed since the 8 November announcement by Prime Minister Narendra Modi that high-denomination currency notes would be scrapped and remonetisation would occur through replacement of new notes and deposits of old notes in bank accounts. Often termed “demonetisation”, this policy has created considerable confusion among commentators, some ill-informed, some politically motivated. A number of fallacies continue to persist—concerning the value of “unreturned” versus “returned” money, the existing “stocks” versus future “flows” of black and counterfeit money, the short- versus the long-term impact on black money, and the expansionary versus contractionary effects of the policy reform—allowing opponents of the policy to claim, prematurely, and without evidence, that it is a failure.

Here is the blow-by-blow account of the Modi government’s cash-clean drive since 8 November:

8 November

■ RBI issues enabling instructions to banks after PM Narendra Modi’s announcement on demonetisation

■ RBI asks banks to allow exchange of old notes up to Rs 4,000, over the counter (OTC) withdrawal of up to Rs 10,000 per day aggregating to Rs 20,000 per week, limit ATM transactions to Rs 2,000 per day per card which would then be raised to Rs 4,000 from 19 November

■ RBI puts up FAQs on its website asking public to be calm, saying that exchange of old notes will be available till 30 December

■ RBI says that banks and ATMs would be shut on 9 November

9 November

■ RBI issues guidelines around ATM recalibration to ensure Rs 500 and Rs 1,000 notes are not dispensed to public

■ RBI asks banks to ensure that adequate Rs 100 notes are available to ATM companies

■ RBI Asks banks to keep branches open on 12 November (Saturday) and 13 November (Sunday) as regular working days

10 November

■ RBI clarifies that daily OTC limit of Rs 10,000 is not applicable on withdrawals by interbank transfers, post offices, airport money changers, white label ATM manufacturers

■ RBI says payment systems such as NEFT, RTGS, cheque clearing will remain open on 12 and 13 November

11 November

■ RBI asks banks and other financial services companies to offer pre-paid instruments to foreign tourists in exchange of foreign exchange tendered

■ RBI asks banks to monitor and report amounts debited to bank accounts and instances of counterfeit notes while exchanging

■ RBI says government departments maybe allowed to withdraw more than Rs 10,000 a day OTC, after submitting request in writing and at discretion of branch officer

■ RBI issues statement reassuring the public at large about availability of cash in the banking system, asks them to maintain patience and exchange currency at convenience

12 November

■ RBI urges public to utilize alternative payment facilities

13 November

■ RBI revises daily exchange limit to Rs 4,500, ATM withdrawal limit to Rs 2,500 and weekly OTC withdrawal limit to Rs 24,000

■ RBI asks banks to make separate queues for old and disabled bank customers

■ RBI asks banks to monitor and report daily withdrawals by bank account holders at ATMs and OTC

14 November

■ RBI asks banks to waive off ATM charges on withdrawals between 10 November and 30 December

■ RBI constitutes task force to oversee recalibration and reactivation of ATMs, under Deputy Governor S,S. Mundra

■ RBI allows current account holders to withdraw up to Rs 50,000 a week, all in Rs 2,000 denomination notes

■ RBI allows banks to hire retired employees for a short period of time to reduce work load at branches

■ RBI asks banks to open bank accounts for workers at plantations, sugar cooperatives, dairy farms and other such groups

■ RBI asks banks to use mobile vans to allow exchange, deposit and withdrawal services at unbanked areas

15 November

■ RBI asks banks to use indelible ink on right index finger of customers who have exchanged cash at their counters, to avoid repeated requests

16 November

■ RBI asks banks to collect PAN details of customers depositing more than Rs 50,000 in bank accounts not seeded with PAN

17 November

■ RBI revises limit for OTC exchange to Rs 2,000, available only once to a person

■ RBI reiterates the availability of cash and asks customers to maintain patience and not hoard cash

18 November

■ RBI allows merchants to enable withdrawal facility of up to Rs 2,000 per day at their point of sale terminals , without any charges levied

20 November

■ RBI refuses to change ATM withdrawal limits from Rs 2,500

21 November

■ RBI announces that banks have received Rs 5.44 trillion worth old high denomination notes through deposits and exchange services

■ RBI allows farmers to withdraw up to Rs 25,000 a week from their loan or deposit accounts

■ RBI allows traders registered with the APMC and mandis to withdraw up to Rs 50,000 a week from their current accounts as well

22 November

■ RBI enhances limits on prepaid payments services providers to load up to Rs 20,000, instead of Rs 10,000 before

23 November

■ RBI asks banks to not accept demonetised notes in small savings schemes

24 November

■ RBI discontinues old currency exchange services at banks and allows it only at RBI counters

■ RBI asks banks to ensure adequate cash supply for pensioners and armed forces personnels

■ RBI asks banks to use the deposit guarantee facility to move old currency notes from branches and decongest them

25 November

■ RBI allows exchange of up to Rs 5,000 per week for foreign tourists visiting India

■ RBI reiterates weekly withdrawal limit of Rs 24,000

26 November

■ RBI asks banks to maintain 100% cash reserve ratio on deposits garnered between 16 September and 11 November to manage excess liquidity

27 November

■ RBI introduces district level deposit guarantee scheme for branches to maintain the old high denomination notes they have

28 November

■ RBI states that banks have garnered old high denomination currency notes worth Rs 8.45 trillion in deposits and exchange services between 10-27 November

■ RBI allows withdrawals beyond the Rs 24,000 weekly limits to the limit of customers deposit legal tender in their bank accounts

30 November

■ RBI limits withdrawals from Jan Dhan accounts to Rs 10,000 per month

■ RBI allows higher withdrawals from Jan Dhan accounts at the discretion of branch managers

1 December

■ RBI warns banks to not consider any fake guidelines being circulated in social media and only refer to the central bank’s website for clarity

2 December

■ RBI announces revision of ceiling under market stabilisation scheme (MSS) to Rs 6 trillion from Rs 300 billion to manage excess liquidity

■ RBI advises large banks to equally distribute currency notes in their currency chests to their own branches and other smaller banks

7 December

■ RBI withdraws 100% CRR requirement with effect from 10 December

■ During RBI monetary policy announcement, Deputy Governor R Gandhi states that Rs 11.55 crore worth old denomination notes back with banks till 6 December

■ Gandhi says Rs 4 lakh crore worth currency notes pumped back into system, which RBI later corrects to Rs 3.81 lakh crore

8 December

■ RBI says currency worth Rs 4.27 trillion sent back to public through withdrawals at bank branches and ATMs

9 December

■ RBI orders technical audit of prepaid instrument issuers like mobile wallets

12 December

■ RBI asks banks to adequately report counterfeit notes received while accepting deposits in old currency notes

■ RBI denies rumours about Axis Bank license being cancelled after instances of illegal currency exchanges

13 December

■ RBI asks banks to preserve and maintain CCTV footage at branches since 8 November

-RBI says Rs 4.61 trillion worth currency back in the system, Rs 12.44 trillion worth deposits received by banks

16 December

■ RBI removes charges on IMPS, USSD and UPI transactions up to Rs 1,000, up to 31 March

■ RBI caps MDR charges to 0.25% on transactions up to Rs 1,000 and at 0.5% for transactions between Rs 1,000 to Rs 2,000

■ RBI to continue weekly Rs 5,000 limit on exchange for foreign tourists

19 December

■ RBI says deposit of old Rs 500 and Rs 1,000 notes will be capped at Rs 5,000. Customers who want to deposit higher will have to provide a reason in the presence of two branch officials

■ The limit shall also apply if multiple smaller deposits add up to Rs 5,000

■ RBI asks banks to accept pre-2005 currency notes

21 December

■ RBI withdraws Rs 5,000 deposit cap and reporting requirement

■ RBI says currency notes worth Rs 5.92 trillion back into the system through withdrawals at bank branches and ATMs

26 December

■ RBI allows additional 60 days grace period for farmers to repay their crop loans and avail 3% interest subvention