India raises cash withdrawal cap to ease public anger

SAN FRANCISCO (Diya TV) — India’s government increased the limit on cash withdrawals from bank accounts Sunday to ease the public tension as millions of people clamored for new rupee bills after a shock abolishment of large denomination notes.

For another day, the country’s banks were occupied by large crowds trying to change 500 and 1,000 rupee bills, demonetized by the government on Tuesday, in an effort to crack down on corruption.

Indian banks received 3 trillion rupees ($44.4 billion) of 500- and 1,000-rupee notes over the last four days, the Finance Ministry said in a statement, in a surge in liquidity in the banking system. Short term interest rates are expected to fall as a result.

The government relaxed the restrictions, including removing a per-day cap of 10,000 rupees, increasing the weekly limit to 24,000 rupees from 20,000 and allowed exchange of bills over the counter at banks to reach 4,500 rupees instead of 4,000.

Modi’s end goal by the demonetization is to bring billions of dollars’ worth of cash in unaccounted wealth into the mainstream economy, as well as dent the finances of Islamist militants who target India and are suspected of using fake 500 rupee notes to fund operations. The banned rupee notes made up more than 80 percent of the currency in circulation, leaving millions without cash and threatening to bring much of the cash-driven economy to a halt.

People “need not be anxious” and should not hoard bank notes because “cash is available when they need it”, the Reserve Bank of India said in a statement. The statement also asked banks to provide details of their cash withdrawn and exchanged daily, to provide the government with a better idea of circulation.

Prime Minister Narendra Modi, facing criticism from opposition groups for putting ordinary people into difficulties, promised further steps to rid the country of graft.

“I know the forces up against me, they may not let me live, they may ruin me because their loot of 70 years is in trouble, but I am prepared,” he said in a speech in western seaside resort of Goa. The decision to demonetize the high value notes was planned in secrecy over the past 10 months, he said.

Modi’s political opponents said they would unite to fight the demonetization move which had made lives difficult for millions of ordinary people.

“The government has spread anarchy in the country, the common man cannot buy daily products,” said Mulayam Singh Yadav, leader of Samajwadi party. Yadav demanded Modi withdraw the decision to cancel the bank notes.