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RBI again rejects EC request to ease cash withdrawal limit

By FnF Correspondent | PUBLISHED: 31, Jan 2017, 11:07 am IST | UPDATED: 31, Jan 2017, 17:14 pm IST

RBI again rejects EC request to ease cash withdrawal limit New Delhi: The Reserve Bank of India (RBI) on Monday rejected Election Commission’s (EC) suggestion to relax the cash withdrawal limit on savings bank accounts yet again, and pointed out that the cap on withdrawing from current accounts had been lifted. This prompted the EC to ask all poll candidates to use current accounts for meeting their campaign expenses.

The RBI had first shot down EC’s proposal on January 27, prompting an angry reaction from the poll watchdog, which reminded the central bank that it is “imperative” that its directions are “complied with” during election season.

Upset about the “cursory manner” in which the RBI had dealt with its request and asking it to reconsider its stand, the Commission, in a letter sent to RBI chief Urjit Patel on January 28, said that the RBI “has not realised the gravity of the matter”.

The RBI wrote back on Monday saying that the response dispatched on January 27 was a “carefully considered” one. The central bank is learnt to have argued that since withdrawal limit on savings bank account is applicable to all individuals, including poll candidates, it’s not clear how it could disrupt the level-playing field in the upcoming elections in Punjab, Uttar Pradesh, Goa, Uttarakhand and Manipur. The RBI then refused to make an exception for the poll candidates, but pointed out that the ceiling on current accounts had been lifted.

The EC is learnt to have written to all state Chief Electoral officers and political parties, informing them that all candidates should open current accounts for election expenditure.

On January 24, the EC had asked the central bank to relax the weekly bank withdrawal limit on savings bank accounts from Rs 24,000 to Rs 2 lakh for candidates contesting elections in Uttar Pradesh, Uttarakhand, Punjab, Goa and Manipur. Ever since the November 8 demonetisation announcement, the RBI has made several changes to the weekly withdrawal limit.

Highlighting the problems being faced by the candidates, the EC had said, “The election process lasts only three to four weeks and therefore, the total amount that can be withdrawn with weekly limit of Rs 24,000 would only be Rs 96,000 as against the statutory limit of expenditure of Rs 28 lakh for the state of Punjab, Uttarakhand and UP and Rs 20 lakh for Manipur and Goa, as fixed by the Government.”
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