Sunday, June 20, 2021
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Cap on withdrawal responsible for cash shortage

More than doubling of ATM withdrawal limit to Rs.10,000 from Rs.4,500 daily is an welcome relief for citizens. Cash crunch one believes could have been better handled by RBI which was following instructions from the government. Most of the cash shortage after the initial few days of demonetisation was artificial. Since there was a cap on withdrawals, people started hoarding money for emergencies which was the reason why ATM’s were short of cash inspite of being loaded with enough money as was done in the past.

RBI should remove limit on withdrawals so that people regain confidence back in the banking system. If there is no limit on withdrawals, people would only remove as much money as they need because they know they can get cash whenever required anytime. Infact, amount of cash withdrawn would come down drastically if there is no cap or limit. Also, in a democracy and free world, citizens should have independent access over their hard-earned money and government should not dictate how it should be withdrawn or spent!

(The views expressed by the author in the article are his/her own.)

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