Headline: With cash leash removed, biz set to grow
the goan network
Karan Sehgal
A lot of businesses had suffered terribly due to lack of adequate cash in the system ever since the Reserve Bank of India (RBI) announced demonetisation on November 08 last year, but all that changed as the apex bank removed the weekly withdrawal limit of Rs 1 lakh per current account.
Now, business-people will be able to withdraw as much as they need from their current accounts, which has given tremendous boost to their liquidity. Industries like real-estate and construction will benefit, in particular, due to this announcement because they employ a lot of labourers who are paid in cash on a daily basis.
Karan Parikh, who has a plastic recycling business, said, “In my business, I have to employ a lot of daily wages labourers, who make something like Rs 500-600 per day and they all have to be paid in cash. Now that the RBI has removed the withdrawal limit from current accounts, it has become a lot easier for me to pay these workers in cash.”
He continued, “It had become difficult to get cash to pay daily wages labourers when RBI had imposed withdrawal restrictions on current accounts. I was trying to sell in cash to get adequate liquidity to pay, but that wasn’t sufficient.”
While business like Parikh’s is a very obvious beneficiary of RBI’s removal of withdrawal limit, other traders also looked relaxed due to this announcement. A cashew seller said, “I don’t employ too many people. So, I don’t need that much cash to pay salaries and wages. Besides, even to my suppliers, some of my payments are in cheque, while some are in cash.”
He continued, “But due to this announcement, more liquidity will come into the system, as cash will flow a lot more easily. This will improve demand for us.”
A manager from a public sector bank said, “A number of industries depend upon workers and labourers, who expect to be paid in cash; often they don’t even have bank accounts. Such industries can take a sigh of relief now with the latest announcement.”
When the RBI had announced demonetisation on November 8, 2016, it had kept a withdrawal limit of Rs 50,000 per week from a current account, which was subsequently increased to Rs 1 lakh on January 1 this year. Now, the RBI has removed this limit of Rs 1 lakh as well.
Quote: A number of industries depend upon workers and labourers, who expect to be paid in cash; often they don’t even have bank accounts. Such industries can take a sigh of relief now with the latest announcement - Bank official
