The Reserve Bank of India (RBI) on Wednesday has announced to remove the limit on cash withdrawal from savings bank accounts. This step of RBI has brought a major relief to the citizens of India. Notably, cash withdrawal limit will be removed in two stages. In the first stage, the weekly withdrawal limit will be increased to Rs 50,000 from the current Rs 24,000 from 20 February and then completely removed from 13 March.
RBI Governor Urjit Patel in press conference further disclosed that as of 27th Jan, 9.92 lakh crore rupees of total currency including new notes of 500 & 2000 is in circulation. Talking about the fake notes, Patel said that both the new notes of Rs.2000 and Rs.500 are difficult to copy, the ones being found are only photocopies. Patel further said that RBI has set up a committee on cyber security to suggest steps for checking online frauds.
RBI Governor said that it will establish a separate Enforcement Department to ensure compliance with the people’s safety in order to curb corruption. RBI governor talking on the GDP said that the expected growth is 6.9 percent for 2016-17 fiscal year ending in the month of March and expected growth for 2017-18 fiscal year will be around 7.4 percent.
Importantly, RBI maintained its key policy rate unchanged at 6.25 per cent. The reverse repo rate stood at 5.75 percent. Interestingly, this was against the consensus estimate of a 25 basis points cut given the easing inflation and rising concerns over a slowing economy. In the previous monetary policy also RBI kept the repo rate and reverse repo rate unchanged.
RBI sees the inflation number at 4 to 4.5 percent during the period of April-September. The MPC is of the view that the persistence of inflation excluding food and fuel prices could set a floor on further downward movements in headline inflation and trigger second order effects. Nevertheless, headline CPI inflation in quarter 4 of 2016-17 is likely to be below 5 percent.
GVA growth for 2016-17 is projected at 6.9 percent with risks evenly balanced around it. RBI believes growth is expected to recover sharply in 2017-18 on account of expected bounce back in demand after demonetization. The emphasis in the Union Budget for 2017-18 on stepping up capital expenditure, and boosting the rural economy and affordable housing should contribute to growth. Accordingly, GVA growth for 2017-18 is projected at 7.4 percent.
RBI said the current account deficit (CAD) is likely to remain muted and below 1 per cent of GDP in 2016-17. There will be no limit on cash withdrawal from March 13. RBI will also raise the withdrawal cap to Rs 50,000 a week from Rs 24,000 a week for savings accounts with effect from February 20.