Courtesy Hindustan Times

The Reserve Bank of India partially reversed a controversial rule on Wednesday that restricted people from depositing over Rs 5000 in old banknotes more than once till December 30.

The relaxation will, however, apply to “fully KYC compliant accounts”. KYC pertains to customer information details.

The restriction – imposed on Monday – had led to criticism of the government for adversely affecting people who had waited for the queues at banks to reduce.

In a message sent to all banks, the RBI said it had reviewed its instructions and decided that the rule will not apply to KYC-compliant accounts.

On Monday, the RBI had said deposits of above Rs 5,000 in banned banknotes can be made only once till December 30, the latest in a series of banking restrictions after the government recalled high-value bills.

It said such deposits would be accepted only after two bank officials satisfied themselves on why the deposits were not made earlier. “The (depositor’s) explanation should be kept on record to facilitate an audit trail at a later stage,” the central bank had said.

The government pulled out 500-and 1,000-rupee bills on November 8, in an effort to fight a parallel ‘black economy’, and has since announced near-daily changes to banking rules to manage the transition. The banned notes can be deposited in banks till December 30 and thereafter at select RBI counters till March 31.

But the shock move has led to a severe cash crunch. Cash withdrawals from banks have been restricted to Rs 24,000 per account per week, although most banks are unable to provide even that. The government has said it will replenish most of the withdrawn cash – about 86% of the money in circulation — with new 2000-and 500-rupee notes.

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