India lifts ATM limit from February 1 as cash crunch eases

NEW DELHI — Limits on ATM withdrawals will be partially lifted from February 1, India's central bank said Monday, as a cash crunch sparked by the ban on high-value rupee notes eases. 

The Reserve Bank of India (RBI) capped cash withdrawals after Prime Minister Narendra Modi's shock decision in November to take all 500 and 1,000 rupee notes out of circulation — 86 per cent of the currency in the cash-reliant nation.

The move triggered long queues outside banks and ATMs which ran dry within hours as hundreds of thousands of people thronged to them every day to withdraw the initial daily limit of 2,000 rupees ($29).

The RBI later increased the amount to 4,500 rupees, and then to 10,000 rupees earlier this month as long lines and crowds at banks eased.

Limits placed on customers who have current accounts or overdraft accounts "stand withdrawn from February 01, 2017", the central bank said in a statement.

However; restrictions on customers who have the more widely used savings accounts would "continue for the present" but could be scrapped "in the near future", the statement added.

Customers with saving accounts are currently allowed to withdraw a maximum 24,000 rupees a week, either through ATMs or over the counter.

The RBI also said that banks could use "their discretion" to place their own daily cash withdrawal limits at ATMs — as was the case before the November 8 announcement.

The sweeping abolition was meant to bring billions in so-called "black", or undeclared, money back into the formal system.

Many, especially in rural India, were left without enough cash to buy food or daily essentials but Modi repeatedly defended the scheme and urged all Indians to switch to non-cash payment methods.