17 January 2017 | Last updated 10:50 PM


 
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RBI asks banks to supply 40 pc of currency notes to rural areas
PTI | Tuesday, 3 January 2017 AT 11:44 PM IST
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Mumbai: To mitigate hardships of poor and marginal farmers due to cash deficit following demonetisation, the Reserve Bank on Tuesday directed banks to distribute at least 40 per cent of currency notes in rural areas.

The 50-day exercise ended on December 30, but the cash supply situation is yet to ease in certain pockets. As a result, the government has not lifted the withdrawal ceiling of Rs 24,000 per week.

On observing that bank notes being supplied to rural areas is not commensurate with the local requirements, some steps have already been initiated, RBI said in a notification.

With a view to ensuring at least 40 per cent bank notes are supplied to rural areas and mitigating the issue in a more enduring manner, the banks maintaining currency chests are advised various steps, including liberal issuance of the existing stock of other denomination notes below Rs 100.

The directive came after PM Modi in his address to the nation on the eve of New Year exhorted banks to make efforts to restore normalcy as fast as possible and should focus on rural areas. Banks have also been asked follow a need-based approach for supply of currency.

‘Next fiscal’s growth to make up for economic slow down’
New Delhi: Niti Aayog Vice-Chairman Arvind Panagariya on Tuesday said demonetisation would have some impact on the economy in the third and fourth quarter of this fiscal but the country would make up for those losses in
FY 2017-18.

“In the quarter in which the demonetisation decision was made and possibly even the quarter that follows which will be the last quarter of the fiscal 2016-17, we might see some decline in the growth rate,” Panagariya told a TV news channel.
“...the impact is going to be small and subsequently as we get into the next fiscal 2017-18, we would make up for what we lose in these two quarters,” he said. Asked whether the government is contemplating of providing big stimulus post-demonetisation, Panagariya said it is too early to jump on any conclusion and one must wait to see the economic impact of demonetisation.

“So whether or not we need a stimulus etc. The answer to that question will depend on what we observe,” the Niti Aayog vice-chairman said. Panagariya further said that some room for increased expenditure may nevertheless come from higher revenues and that is generally a good news.
 
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