Government Withdraws Rs. 5000 Limit on SBN for KYC Compliant Accounts
· Move to Pipe Deposits towards PM Garib Kalyan Scheme
In a partial rollback, the Reserve Bank of India has relaxed its notification for deposits of over 5000 rupees for people with fully verified bank accounts.
The notification on December 19 had specified that deposits of over 5000 rupees could be made only after furnishing a satisfactory reason to at least three bank officials.
The notification was valid till December 30.
Earlier, Cabinet on Wednesday passed an ordinance to disburse salary to government employees and daily wage laborers through electronic mode or cheques, sources told News18.
The ordinance has been approved after an amendment to the Payment of Wages Act which empowers employers to pay salaries through online mode and cheques.
However, the government sources say that there has been no complete ban on cash payment and employers will continue to have the option to pay wages in cash.
The measure is to protect the exploitation of workers, government sources said. It could also be a signal to the private sector to join the government’s push towards a completely cashless economy.
[Ref: RBI/2016-17/191 – DCM (Plg) No. 1911/ 10.27.00/2016-17 dated 21st Dec 2016]
Sub: Withdrawal of Legal Tender Character of existing Rs. 500/- and Rs. 1000/- Bank Notes (Specified Bank Notes) - Deposit of Specified Bank Notes (SBNs) into bank accounts- Modification
Please refer to our circular DCM (Plg) No. 1859/10.27.00/2016-17 dated December 19, 2016. On a review of the above, we advise that the provisions of the above circular at sub para (i) and (ii) will not apply to fully KYC compliant accounts.
[Ref: Revised Circular – RBI/2016-17/189 – DCM (Plg) No. 1859/10.27.00/2016-17 dated 19th December 2016]
Please refer to Circular DCM (Plg) No.1226/ 10.27.00/2016-17 dated November 08, 2016 on the captioned subject. On a review of the provisions ii, iii and iv at C of Para 3 dealing with credit of the value of SBNs into bank accounts it has been decided to place certain restrictions on deposits of SBNs into bank accounts while encouraging the deposits of the same under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016 as indicated below:
i . Tenders of SBNs in excess of Rs. 5000 into a bank account will be received for credit
only once during the remaining period till December 30, 2016. The credit in such
cases shall be afforded only after questioning tenderer, on record, in the
presence of at least two officials of the bank, as to why this could not be
deposited earlier and receiving a satisfactory explanation. The explanation
should be kept on record to facilitate an audit trail at a later stage. An
appropriate flag also should be raised in CBS to that effect so that no more
tenders are allowed. ii. Tenders of SBNs up to Rs.
5000 in value received across the counter will allowed to be credited to bank
accounts in the normal course until December 30, 2016. Even when tenders
smaller than Rs. 5000 are made in an account and such
tenders taken together on cumulative basis exceed Rs.
5000 they may be subject to the procedure to be followed in case of tenders
above Rs. 5000, with no more tenders being allowed
thereafter until December 30, 2016.
iii. It may also be ensured that full value of tenders of SBNs in excess of Rs. 5000 shall be credited to only KYC compliant accounts and if the accounts are not KYC compliant credits may be restricted up to Rs. 50,000 subject to the conditions governing the conduct of such accounts.
iv. The above restrictions shall not apply to tenders of SBNs for the purpose of deposits under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016.
v. The equivalent value of specified bank notes tendered may be credited to an account maintained by the tenderer at any bank in accordance with standard banking procedure and on production of valid proof of Identity.
vi. The equivalent value of specified bank notes tendered may be credited to a third party account, provided specific authorisation therefor accorded by the third party is presented to the bank, following standard banking procedure and on production of valid proof of identity of the person actually tendering, as indicated in Annex-5 of our circular cited above.