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RBI withdraws deposit norm, Rs 5k limit for KYC-accounts

The Reserve Bank of India (RBI) in a sharp U-turn on Wednesday withdrew the circular for KYC-compliant accounts that barred people from depositing over Rs 5,000 in old currency more than once till December 30.

The central bank said that on reviewing its notification of November 19, it is advising banks to withdraw the two conditions for fully KYC-compliant accounts.

On November 19, the RBI had announced that deposits of demonetised Rs 500 and Rs 1,000 notes in excess of Rs 5,000 will be allowed only once till December 30 — that too after strict scrutiny.

On Monday night, Finance Minister Arun Jaitley had said that one-time deposit till December 30 will not invite scrutiny by bank officials.

According to the earlier notification, when a person deposits over Rs 5,000 in withdrawn currencies, the account will be credited only after questioning him or her, in the presence of two bank officials, as to why the notes had not been deposited earlier. The bankers were to keep the explanatory statement on record for a future audit trail.

The decision created confusion, when Jaitley contradicted the RBI notification, saying people will not be questioned if any amount of old currency is deposited in one go, but repeated deposits may provoke queries.

Amid currency crunch, the government on Wednesday brought an Ordinance to amend the Payment of Wage Act for allowing business and industrial establishments to pay salaries through cheques or by using electronic modes.

However, employers will also have the option to pay wages in cash.

As per the practice, the government brings Ordinance to amend laws for immediate implementation of new rules. An Ordinance is valid for six months only. Government is required to get it passed in Parliament within that period.

The Payment of Wages (Amendment) Bill, 2016, seeks to amend Section 6 of the principal Act to enable employers pay wages to their employees through cheques or by crediting it to their bank accounts electronically.

The Bill was introduced by Labour Minister Bandaru Dattatreya amid din over demonetisation issue.

It will also allow state governments to specify industrial or other establishments that adopt cashless modes for salary payments.

The new procedure will serve the objective of “digital and less cash economy”, the bill states.

 

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