India Tightens Cash Deposit Rules Just Days Before Ban On Banknotes End

Prime Minister Narendra Modi shocked the country on November 8 by abolishing 500 and 1,000-rupee notes, which accounted for 86 percent of the cash in circulation. The move was aimed at cracking down on the shadow economy, but has brought India's cash economy to a virtual standstill.

The government and the Reserve Bank of India have since taken a slew of measures to ease the pain from its measures. They are detailed below in chronological order.

December 19

• RBI imposes deposit cap of 5,000 rupees until December 30 subject to satisfactory response on such late deposit

December 13

• RBI advices banks to preserve CCTV recordings at branches between November 8 to December 30

December 8

• Government announces incentives on retail purchases of some products on cashless transactions

December 7

• RBI withdraws temporary order for banks to place deposits under cash reserve ratio

December 2

• Government raises limit for market stabilisation bonds to 6 tln rupees to absorb extra liquidity

December 1

• Government says old 500 notes can no longer be used at petrol stations, airline ticket counters

November 30

• RBI allows banks to use all cash to meet hiked cash reserve requirement ratio
• RBI tightens monthly withdrawal rules from "Jan Dhan" accounts for poor

November 28

• Government announces tax amnesty scheme for unreported cash; will charge 50 pct in taxes, surcharges
• People would also have to park quarter of total sum in non-interest bearing deposit for 4 years
• RBI to allow withdrawals above Rs 24,000 weekly limit of deposits made in legal tender.
• Those withdrawals would be in new 2,000, 500 rupee bills

November 26

• RBI says orders banks to place 100 pct of deposits between Sept-Nov under cash reserve ratio

November 25

• RBI expands basket of securities that can be accepted for collateral under money market ops
• RBI says old currency notes can be exchanged at RBI branches
• RBI says tourists can exchange foreign currency worth up to Rs 5,000 per week till December 15

November 24

• Government stops over the counter exchange of old banknotes; can only be deposited
• Government to ensure adequate cash supply for pensioners, armed forces personnel
• Allows certain payments in old 500 rupees notes including at tolls, hospitals for limited time

November 23

• Indian government says will offer 210 bln rupees in farm credit to farmers

November 22

• RBI sets balance kept in prepaid wallets, cards (PPIs) at 20,000 rupees from 10,000 til December 30
• Merchants can transfer up to 50,000 rupees from PPIs to banks til December 30
• Monthly limits on transactions via PPIs raised to 20,000 rupees for 10,000 til Dec 30
• RBI asks state-run Nabard to disburse up to 230 bln rupees for crop loans

November 21

• RBI allows cash withdrawal of up to 250,000 rupees for wedding-related expenses
• RBI allows farmers to withdraw up to 25,000 rupees a week from their loan, deposit accounts
• RBI gives small borrowers 60 more days before loans of up to Rs 10 mln are marked substandard
• Government allows farmers to purchase seeds from state-run outlets with old 500 rupee notes

November 18

• RBI sets limit of cash withdrawal at card swiping machines at 2,000 rupees per day

November 17

• Government allows farmers to withdraw up to 25,000 rupees a week against the crop loans
• Government extends time limit for farmer to pay crop insurance premiums by 14 days
• Cuts limit for over-the-counter exchange of old bills at banks to 2,000 rupees from 4,500

November 15

• Government says banks must use indelible ink to ensure people change cash only once

November 14

• Extends deadline for payments in old notes including for petrol for limited time

November 13

• RBI raises cap on weekly cash withdrawals from banks to 24,000 rupees from 20,000
• Removes per-day withdrawal limit cap of 10,000 rupees
• Raises limit for over-the-counter exchange of old bills at banks to 4,500 rupees from 4,000
• Waives ATM fees for all transactions by savings bank customers til December 30
• Govt increases withdrawal limits at recalibrated ATMs to 2,500 rupees/day from 2,000 rupees

November 11

• Extends deadline for payments in old notes including for petrol for limited time

November 8

• India abolishes 500, 1,000 rupee notes in fight against 'black money'
• 500, 1000 rupee notes must be tendered into banks, RBI by December 30
• Caps exchange of old bills over-the-counter at banks at 4,000 rupees
• Caps cash withdrawals from bank accounts at 10,000 rupees per day till November 24
• Caps cash withdrawals from bank accounts at 20,000 rupees per week till November 24
• Caps cash withdrawals from ATMs at 2,000 rupees per day per card till November 1
• Caps cash withdrawals from ATMs at 4,000 rupees per day per card from November 19
• Allows certain payments in old notes including for petrol for limited time