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RBI Amends Rs. 5,000-Deposit Order After Backlash, No Questions For KYC Accounts

RBI Amends Rs. 5,000-Deposit Order After Backlash, No Questions For KYC Accounts

NEW DELHI: In its 60th notification since the notes ban was announced, the Reserve Bank of India (RBI) today made an important change in how outlawed 500- and 1,000-rupee notes can be deposited in banks after a huge backlash over the rule that required an explanation from people for deposits above Rs. 5,000. No questions will be asked for deposits above Rs. 5,000 for “fully compliant” KYC or Know Your Customer accounts, the RBI said, two days after it declared that every such deposit would invite questions.
On Monday, the government had said that people can make just one deposit of more than Rs. 5,000 in banned notes till December 30 and that too after scrutiny.
The government said it was presuming that in the five weeks since Prime Minister Narendra Modi announced the ban in a move to check tax evasion, most people would have deposited their old notes. The earlier notification said when a person deposits over Rs. 5,000 in banned notes, 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 statement on record.
Many complained that they had held off on depositing their cash only because they had been advised by the government not to rush and they had till December 30 to do so. Finance Minister Arun Jaitley later clarified that no questions will be asked if any amount of the banned currency is deposited in one go, but said repeated deposits may raise queries. “If you have old currency, deposit it with banks at one go as repeat deposits of such notes raise doubts,” Mr Jaitley said, explaining that anyway, there is no use for old notes anymore. The RBI’s 60th notification in 43 days earned the central bank the title “Reverse” Bank of India from the Congress party. Yesterday, its number 2 leader Rahul Gandhi tweeted that “RBI is changing rules like the PM changes his clothes.” The notes ban took out 86 per cent of the currency in circulation or 15.44 lakh crores. More than 13 lakh crores of that has been returned to banks and experts say virtually all the money that was outlawed will be returned, which challenges the government’s claim that demonetisation would unearth about five lakh crores in undeclared money. PM Modi’s decision has been widely praised for intent, but has been criticised for execution because of queues at banks and ATMs and limited new currency notes

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