In a move to ease the cash supply situation in rural pockets, especially for the poor and marginal farmers, the Reserve Bank of India (RBI) on Tuesday directed all banks to distribute at least 40 per cent of currency notes in those areas.
The directive came just a couple of days after Prime Minister Narendra Modi in his address to the nation on New Year’s eve had said banks should make efforts to restore normalcy as fast as possible and should focus on rural areas. “I have asked all officers concerned in the Government to focus their attention on this task. They have especially been told to proactively resolve the problems in rural and remote areas,” Modi had said.
As the 50-day demonetisation drive ended on December 30, the cash supply situation did not improve as expected by the public. For example, the Government did not lift the withdrawal ceiling of Rs 24,000 per week, though it increased withdrawal limit to Rs 4,500 from Rs 2,500 through ATMs. “On observing that bank notes, being supplied to rural areas, are not commensurate with the local requirements, some steps have already been initiated,” the RBI said in a notification.
“With a view to ensuring at least 40 per cent bank notes are supplied to rural areas and mitigating the issue in a more enduring manner, the banks maintaining currency chests are advised various steps, including liberal issuance of the existing stock of other denomination notes below Rs 100.
“Banks should advise their currency chests to step up issuance of fresh notes to rural branches of regional rural banks, district central cooperative banks and commercial banks, white label ATMs and post offices in rural areas on a priority basis which are considered as main rural channels of distribution,” it said.