India’s central bank - The Reserve Bank of India (RBI) which controls monetary policy in the country, announced its removal of the cash withdrawal limit. Effective as of 13th March, banked customers will be able to withdraw cash at ATMs and their bank accounts without limit. Previously, there was a cash withdrawal limit of INR 50,000 per week in February and INR 10,000 in January across these channels. This earlier limit was imposed due to recent demonetisation in late December 2016 to ensure enough cash is circulated in the country following the removal of notes in higher denominations.
In response to the removal of the cash withdrawal limit by the RBI, the retail banks started to set limits on free cash withdrawals made at the branch.
In response to the removal of the cash withdrawal limit by the RBI, the retail banks started to set limits on free cash withdrawals made at the branch. State Bank of India (SBI), the country’s largest bank allows maximum of 3 cash withdrawals at their branch in a month and will charge INR 50s (equals to USD 0.75) for the 4th cash withdrawal made at this channel. This free cash withdrawal limit varies by banks and account types in which priority or preferred customers usually can perform more free cash withdrawals per month. The fee will apply on a cash withdrawal at the branch while ATM withdrawals will not be charged.
According to RFi Group data from India Retail Banking Council, as of end 2016, three out of four payment transactions (75%) were still paid by cash, although this figure is slightly lower among the affluent ones (72%). The affluent ones are also less reliant on branches or ATMs in defining a relationship with their main bank. The removal on cash withdrawal caps and transaction limits will have little impact on the affluent segment.
Source: RFi Group – India Retail Banking Council (H2 2016)