Wednesday, January 4, 2017

RBI asks banks to ensure 40% notes are supplied to rural areas through rural Banks/Post Offices/ATM

With the note ban impact in rural areas, where mobile phone penetration, especially in terms of making digital payments, is very poor, the public had found it tough to carry on their day-to-day business. (Reuters)

With the note ban impact on larger towns and cities abating fast, the Reserve Bank of India (RBI) has turned its attention to rural India where the situation is still not back anywhere near normal. Looking to bring relief, the central bank today issued an order saying that sending currency notes to these areas must be speeded up and that the quantity of sums dispatched too must be raised. RBI has put a figure to it too, to ensure there is no confusion. It said that banks must supply at least 40 per cent of currency to rural areas. In a statement, RBI said, “Banks should advise their currency chests to step up issuance of fresh notes to rural branches of RRBs, DCCBs and commercial banks, white Label ATMs in rural areas & post offices in rural areas on priority basis which are considered main rural channels of distribution.”

With the note ban impact in rural areas, where mobile phone penetration, especially in terms of making digital payments, is very poor, the public had found it tough to carry on their day-to-day business as ATMs and banks did not have enough currency notes to distribute – even wages paid to workers were affected as there was no cash available. Also, the fact that Rs 2000 note was the most available note added to problems – it was difficult to make small purchases and get change in return from shops.

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