The Reserve Bank of India on Tuesday directed all banks to undertake several measures to ensure that around 40% of their currency is dispensed to rural areas, which continue to struggle for cash after the demonetisation of Rs 500 and Rs 1,000 notes. In a notification, the central bank said banks should advise their currency chests to increase the issuance of notes to Regional Rural Banks, District Central Cooperative Banks, commercial banks, white label ATMs and post offices.
Banks were also told to furnish daily issuances along with a weekly summary every Friday. The central bank’s directive also said notes of Rs 500 and lower should be issued, specifying that notes below Rs 100 should be “issued liberally”. Coins should also be made available on a “priority basis”, it said.
“As the rural requirements could vary from district to district depending on variations in the rural and urban mix of each district in terms of relative shares in CASA deposits and number of deposit accounts, to facilitate a need based approach in this regard a certain percentage of allocation has been assigned to each district depending on the rural and urban mix.”
The Centre has been heavily criticised for demonetising the high-value currency notes on November 8. The country has faced a severe cash crunch after the move, especially rural areas. The Rs 500 and Rs 1,000 notes had made up 86% of India’s liquidity when they were scrapped. After demonetisation, Rs 2,000 notes were the first to be issued, a denomination that was hard to use for small purchases. Over the past few weeks, new Rs 500 notes have been circulated more, though rural areas are still reeling from the cash crunch.
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