RBI increases ATM withdrawal limit to Rs 10,000

A notification from the Reserve Bank of India (RBI), on Monday, increasing the daily cash withdrawal limit at ATMs from Rs 4,500 to Rs 10,000 per card, has brought cheers to customers.

This relaxation, coming nearly two and a half months post the Prime Minister Narendra Modi’s announcement to demonetise Rs 500, Rs 1,000 notes that resulted in an unprecedented cash crunch, is of course a relief to the common man.

Now, in one go, he/she can withdraw Rs 10,000 per card as against Rs 4,500, which is an amount good enough for an average citizen to take care of his short-term cash needs. But, this wouldn’t, however, address the actual problem—panic-driven hoarding of cash at a time when banks are still struggling to deal with inadequate currency supply.

There are mainly three reasons why the measure wouldn’t cure panic: