RBI takes big U-turn, modifies cash deposit rules again and exempts KYC accounts from Rs 5000-cap in old Rs 500, Rs 1,000 banknotes

The Reserve Bank of India (RBI), in a big U-turn on Wednesday, modified old currency deposit rules and said that the fully KYC (Know Your Customer) compliant account holders can deposit over Rs 5000 in old Rs 500 and Rs 1,000 banknotes without any questions asked.

In its 60th communication issued by the RBI-Finance Ministry on 43rd day of demonetisation since November 8, RBI modified its stand on old currency deposit rules. The new circular mentions that now fully KYC compliant account holders can deposit over Rs 5000 without any questions asked. 

Earlier on December 19, the RBI had issued a notification in which it had said that the deposits of above Rs 5,000 in banned banknotes will be made only once till December 30. 

In the notification issued on December 19, the RBI also had said that such deposits will be accepted only after two bank officials satisfy themselves on why the deposits were not made earlier. The accounts will be compliant with customer information details, called KYC, otherwise deposits can be restricted to Rs 50,000.

On Wednesday, after rising pressure from the common people who were facing many issues in banks while depositing amount in old bank notes, the RBI decided to modify the Dec 19 decision.

Here are the top eight points of the December 19 notification issued by the RBI-

1. It has been decided to place certain restrictions on deposits of SBNs into bank accounts while encouraging the deposits of the same under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016:

2. Tenders of SBNs in excess of Rs 5000 into a bank account will be received for credit only once during the remaining period till December 30, 2016. The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. 

3. The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in CBS to that effect so that no more tenders are allowed.

4. Tenders of SBNs up to Rs 5,000 in value received across the counter will allowed to be credited to bank accounts in the normal course until December 30, 2016. Even when tenders smaller than Rs 5000 are made in an account and such tenders taken together on cumulative basis exceed Rs 5000 they may be subject to the procedure to be followed in case of tenders above Rs 5000, with no more tenders being allowed thereafter until December 30, 2016.

5. It may also be ensured that full value of tenders of SBNs in excess of Rs 5,000 shall be credited to only KYC compliant accounts and if the accounts are not KYC compliant credits may be restricted up to Rs 50,000 subject to the conditions governing the conduct of such accounts.

6. The above restrictions shall not apply to tenders of SBNs for the purpose of deposits under the Taxation and Investment Regime for the Pradhan Mantri Garib Kalyan Yojana, 2016.

7. The equivalent value of specified bank notes tendered may be credited to an account maintained by the tenderer at any bank in accordance with standard banking procedure and on production of valid proof of Identity.

8. The equivalent value of specified bank notes tendered may be credited to a third party account, provided specific authorisation therefor accorded by the third party is presented to the bank, following standard banking procedure and on production of valid proof of identity of the person actually tendering.