Banks say note exchange facility being misused

NEW DELHI: Confusion over the facility for exchanging old high-denomination notes, subject to a limit of Rs 4,000, at banks and post offices by providing valid identity cards has led to some people misusing the system to legalise their unaccounted wealth.

At present, the exchange facility is a one-time window and the limit will be reviewed after November 24. Several bank officials told ET that the exchange of demonetised Rs 500 and Rs 1,000 notes over the counter for Rs 4,000 is being misused and banks are taking steps to address the issue.

A senior official with the State Bank of India said the Reserve Bank of India has sent an email to banks stating that the exchange facility for Rs 4,000 is a one-time window. “But we have no way to track whether an individual has already availed of this benefit at another bank,” he said.

“The intention is to support people to meet exigencies. The ATMs are now functional and people can withdraw money as per the existing limits,” said a senior official with Punjab National Bank, adding that some individuals are misusing this window by going to different branches of a bank or other banks.

People can also use multiple IDs at the same branch or post office as systems are not in place to verify transactions.

State-run Central Bank of India has developed software to keep track of the Aadhaar number and PAN card of beneficiaries, which is shared across all its branches, an official said.

“It is taking time to update, given the huge flow of people, but we are ensuring that the facility is made available only once and is not misused,” he said.

A senior official with Corporation Bank said that individual branches are maintaining a similar database and no person can exchange currency for more than Rs 4,000 at the same branch.

“We are educating people on the guidelines – some of them don’t know about it and are not coming with any mala fide intention,” he added.

A finance ministry official said all such data will be collated and tracked. “If there is any unusual pattern of withdrawals from any Aadhaar number and PAN account, we will be investigating such cases,” he said.

Specified bank notes of aggregate value of Rs 4,000 or below may be exchanged for any denomination of bank notes with a requisition slip in the format specified by the Reserve Bank and proof of identity, the RBI said in a circular dated November 8.

“The limit of Rs 4,000 for exchanging specified bank notes shall be reviewed after fifteen days from the date of commencement of this notification and appropriate orders may be issued, where necessary,” the RBI said.

Cash withdrawal from a bank account over the counter is restricted to Rs 10,000 a day, subject to a limit of Rs 20,000 a week, until November 24.

Withdrawal from ATMs is restricted to Rs 2,000 per day per card up to November 18.

Source : http://economictimes.indiatimes.com