In­dia puts fresh curbs on cash, com­pound­ing cri­sis

Kuwait Times - - BUSINESS -

In­dia’s cen­tral bank yes­ter­day im­posed fresh re­stric­tions on de­posits of banned cur­rency notes into bank ac­counts, days be­fore the De­cem­ber 30 dead­line to swap old ru­pee bills for new ones. Prime Min­is­ter Naren­dra Modi un­leashed chaos last month with his shock move to with­draw high-de­nom­i­na­tion 500 ($7.50) and 1,000 ru­pee notes from cir­cu­la­tion, in an ef­fort to tackle wide­spread cor­rup­tion and tax eva­sion.

The de­ci­sion trig­gered a cash cri­sis, with long queues ma­te­ri­al­iz­ing out­side banks across the coun­try as peo­ple tried to get rid of their old notes some 86 per­cent of all bills in cir­cu­la­tion a head of next week’s dead­line.

Yes­ter­day the Re­serve Bank of In­dia (RBI) said that peo­ple would now only be al­lowed to make a sin­gle de­posit amount­ing to more than 5000 ru­pees ($75) be­fore the dead­line, and would be re­quired to ex­plain why they hadn’t de­posited the money ear­lier.

“Ten­ders of Spec­i­fied Bank Notes (SBNs) in ex­cess of ru­pees 5,000 into a bank ac­count will be re­ceived for credit only once dur­ing the re­main­ing pe­riod till De­cem­ber 30,” the RBI said. Op­po­si­tion par­ties at­tacked the move, which comes as many In­di­ans are al­ready fac­ing a short­age of cash with ATMS run­ning dry as thou­sands throng to them. “There are el­derly, housewives, poor and stu­dents who were wait­ing for the long queues to be­come smaller,” the op­po­si­tion Congress party spokesman Ran­deep S Sur­je­w­ala told re­porters in Delhi. “This new rule shows that Modi gov­ern­ment has no di­rec­tion or clear pol­icy”, he added. Modi has re­peat­edly de­fended the scheme, say­ing it will bring bil­lions in so-called “black”, or un­de­clared, money back into the for­mal sys­tem. “I said this at the start, and will re­peat again to­day, these dif­fi­cul­ties that you have been fac­ing will start eas­ing af­ter De­cem­ber 30,” he said yes­ter­day, ad­dress­ing a po­lit­i­cal rally in the north­ern state of Ut­tar Pradesh. — AFP


NEW DELHI: An In­dian man sits out­side a cash­less ATM ma­chine in New Delhi Yes­ter­day.

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