In its 60th circular issued since November 8, the Reserve Bank of India issued a notification withdrawing the limit of Rs. 5000 in deposits of old Rs 500 and Rs 1000 notes for KYC-complaint accounts.
In its circular issued on Wednesday, the central bank said that after a review the cap of Rs 5000 is being withdrawn.
The circular, issued by RBI Chief General Manager P Vijaya Kumar, was addressed to Chairmen, CEOs and Managing Directors of Public Sector Banks, Private Sector Banks, Foreign Banks, Regional, Rural Banks, Urban Cooperative Banks and State Cooperative Banks.
“Withdrawal of Legal Tender Character of existing ₹ 500/- and ₹ 1000/- Bank Notes (Specified Bank Notes) - Deposit of Specified Bank Notes (SBNs) into bank accounts- Modification
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,” it read.
This comes after on Monday the RBI had announced the cap of Rs. 5000, stating that customers would be asked why they did not deposit money in old notes earlier.
However, later on Monday, the Finance Minister Arun Jaitley made a U-turn saying that customers won’t face any scrutiny if any amount exceeding Rs 5000 in discontinued currency notes if deposited in a ‘single instance’.
However, bankers were asked to keep the explanatory statement on record for future audit trail.
According to the earlier notification, when a person deposits over Rs 5,000 in withdrawn currencies, the account will be credited only after questioning him or her, in the presence of two bank officials, as to why the notes had not been deposited earlier. The bankers were to keep the explanatory statement on record for a future audit trail.
The decision created confusion, when Jaitley contradicted the RBI notification, saying people will not be questioned if any amount of old currency is deposited in one go, but repeated deposits may provoke queries.