Note ban: Cash withdrawal limit to be Rs 50,000 a week from February 20, no cap from March 13

New Delhi: The Reserve Bank of India (RBI) on Wednesday said that weekly withdrawal limit for savings accounts will be increased from Rs 24,000 to Rs 50,000 from February 20 while there will be no limit on withdrawal from March 13.

RBI had imposed these limits in November last year after the government announced a ban on old high-value currency notes, and began to replace them with new notes.

Effective February 1, restrictions on daily withdrawal of money from ATMs and from current accounts effective had already been lifted.

For the second time in a row, the RBI today opted for a status quo in its key rates but shifted the stance of the monetary policy from 'accommodative' to 'neutral'.

"The decision of the Monetary Policy Committee (MPC) is consistent with a neutral stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 percent by Q4 of 2016-17 and the medium-term target of 4 percent within a band of +/- 2 percent, while supporting growth," it said.

Accordingly, the repo rate at which it lends to the system stands at 6.25 percent and the reverse repo rate at which it absorbs excess liquidity is also retained at 5.75 percent.

The monetary policy committee said it is "committed to bringing headline inflation closer to 4.0 percent on a durable basis and in a calibrated manner" and this requires further "significant decline in inflation expectations, especially since the services component of inflation that is sensitive to wage movements has been sticky.

This is RBI's second monetary policy review after demonetisation of old Rs 500 and Rs 1,000 currency notes.

Key highlights of RBI Governor Urjit Patel's press conference

-RBI says currency in circulation worth Rs 9.92 lakh crore as on January 27

- No limit on weekly withdrawal from March 13

- Weekly withdrawal limit for savings accounts to be raised to Rs 50,000 from February 20

- There is still scope for lending rates of banks to come down

- RBI to establish a separate Enforcement Department to ensure compliance

- Accessing economic conditions in short term tough due to demonetisation

- MPC is committed to achieve the targeted CPI of 4 percent

 

Key Highlights of Monetary Policy

- Makes case for faster resolution of NPAs and hastening recapitalisation of banks for lower lending rates

- Steel consumption, port traffic, international air freight, foreign tourist arrivals weathered effect of demonetisation

- Surplus liquidity to fall with progressive remonetisation; abundant liquidity with banks may persist in early 2017-18

- Upside risks to inflation - rise in crude oil prices, volatility in exchange rate, and fuller effect of the 7th Pay Panel

- RBI sets up committee on cyber security to suggest steps for checking online frauds

-Current  account  deficit  is  likely  to  remain  muted  and  below  1  per  cent  of  GDP in 2016-17

-Decline in headline  CPI  inflation  in  November  and  December  has  been  larger  than  expected

- Headline CPI inflation in Q4 of 2016-17 is likely to be below 5 percent

- Inflation is projected in the range of 4.0 to 4.5 percent in first half of the financial year

- In the second half it will be in range of 4.5 to 5.0 per cent

- The  Committee  remains  committed  to  bringing  headline  inflation  closer  to  4.0  percent

- Excluding food and fuel, inflation has been unyielding at 4.9 percent since September

- Global growth is projected to pick up modestly in 2017

- RBI changes policy stance from "accommodative" to "neutral"

- All six members of MPC voted in favour of the decision

- Next monetary policy on April 5, 6

- See CPI at 4 percent within a band of +/- 2 percent in the medium term

- Marginal Standing Facility (MSF) rate and the Bank Rate stands at 6.75 percent

- RBI keeps CRR unchanged at 4 percent

- Heavy selling in banking stocks

- Sensex plunges by over 180 points

- Expects rebound to 7.4 percent next year

- GDP Growth target lowered to 6.9 percent from earlier target of 7.1 percent

- Expect growth to recover sharply in FY 18

- See growth recover sharply