rbi rule deposit of rs 5000 more than demonetisation modi govt currency ban
The Reserve Bank of India (RBI) seal is pictured on a gate outside the RBI headquarters in Mumbai, India, February 2, 2016.Reuters file

With a sudden surge in deposits in no-frill Jan Dhan accounts post demonetisation, the Reserve Bank of India has put a cap on withdrawals from these accounts at Rs 10,000 per month, which it termed as a move to protect farmers and rural people from being used for money laundering activities.

"With a view to protect innocent farmers and rural account holders of PMJDY (Pradhan Mantri Jan-Dhan Yojana) from activities of money launders and legal consequences under the Benami Property Transaction & Money Laundering laws, it has been decided to place certain limits," the central bank said in a notification on Tuesday.

According to the apex bank's notification, account holders can withdraw up to Rs 10,000 per month if they are compliant with KYC (know your customer) norms. "The branch managers may allow further withdrawals beyond Rs 10,000 only after ascertaining the genuineness of such withdrawals and duly documenting the same on bank's record," it said.

Customers who have not complied with KYC norms can only withdraw up to Rs 5,000 per month within an overall deposit ceiling of Rs 10,000.

Know your customer (KYC) is a process through which banks obtain information about the identity and address of the customers.

After the announcement of demonetisation on November 8, the total balance in Jan Dhan accounts rose 60 percent to Rs 72,834.72 crore. Interestingly, the scheme launched in August 2014, took 16 months until December 2015 to reach a total deposit balance of Rs 27,283.05 crore.

Earlier, the finance ministry had allowed deposits upto Rs 50,000 to check misuse of these accounts for turning black money to white. "Some people are using Jan Dhan accounts to deposit black money. Up to Rs 50,000 can be deposited in Jan Dhan accounts," economic affairs secretary Shaktikanta Das had said.