Two days after the government made a bold move to scrap 500 and 1000 ₹ notes, the banks have finally opened Thursday to allow depositors to withdraw cash and exchange old notes. Long queues have been reported from various locations across the country as depositors throng bank branches to withdraw money.
Banks are also reportedly struggling with not enough cash and have requested depositors to be patient and not crowd the banks at the same time. They are hoping the situation to improve over the weekend as ATMs become operational and banks stay operational on Saturday and Sunday to meet the rising demand.
Here are a few points to keep in mind as you move to the banks or ATMs to withdraw that much needed cash.
1) Everyone is rushing to the bank. I am not in an emergency, but I am worried banks will run out of cash?
There is no crisis of liquidity in the system. The government has only scrapped higher denomination notes and has provided a window till December 30 to exchange the stock in your possession. It will take a few days for banking operations to get back to normal. So, rush to the banks only if you face an emergency like unavoidable cash payments, travel or need loose change for daily expenses. All other expenses can be met through credit/debit cards, net banking, Paytm and other payment wallets.
This will also help the banks to provide cash to the real needy/senior citizens who may not be transacting online or through plastic money.
2) I need money immediately. What can I do?
There are multiple routes you can take for this –
- For exchange upto ₹4000 in cash you can go to any bank branch with valid identity proof.
- For exchange over ₹4000, which will be met through credit to Bank account only, you can go to the branch where you have an account or to any other branch of the same bank. You can withdraw up to ₹10,000 by way of cheque.
- In case you want to go to a branch of any other bank where you are not maintaining an account, you will have to furnish valid identity proof and bank account details required for electronic fund transfer to your account.
Image: You would need to fill in the above form for withdrawals upto ₹4000 in cash.
3) When can I withdraw money from ATMs?
The ATMs are likely to be functional from 11th November. You can withdraw from ATMs upto a maximum of ₹2,000/- per card per day upto 18th November, 2016. The limit will be raised to ₹4000/- per day per card from 19th November 2016 onwards.
4) Do I have to worry if I have cash worth ₹2 lakh to exchange?
Well, the government claims you have nothing to worry if you are a housewife, artisan or run a small business. “Such group of people need not worry about such small amount of deposits up to ₹1.5 or 2 lakh since it would be below the taxable income. There will be no harassment by the Income Tax Department for such small deposits made,” said Revenue Secretary Hasmukh Adhia to reporters on Wednesday(Novemeber 9).
5) But what if I have more than ₹2.5 lakhs in cash, saved over years? What do I do then?
You are likely to be in trouble if you cannot match the source of income while depositing such a large amount at your bank. Failure to convince the IT Depertment in case of an income mismatch is likely to attract tax plus a 200% penalty.
Small business owners should be able to provide enough evidence that this cash was withdrawn for business purpose and not with the purpose of generating black money.
In case you plan to break this amount in small tranches and deposit at different banks to avoid scrutiny, it will not help as all such deposits can be tracked using your PAN.