Lifting cash withdrawal cap to end Election Commission-RBI tiff

NEW DELHI: RBI's lifting of cash withdrawal limits from all types of bank accounts barring savings accounts was an unintended consequence of its dispute with the Election Commission over raising this limit for candidates in poll-bound states to Rs 2 lakh a week.

During discussions between EC and RBI on Monday to resolve the issue, the central bank representatives are known to have pointed out two things. One, the alleged "lack of application of mind" by the EC while issuing directions to RBI to raise the Rs 24,000 weekly cash withdrawal limit to Rs 2 lakh. "All EC needed to do was to insist on candidates operating current accounts for poll expenditure, for which the limit was Rs 1 lakh, much higher than the savings bank withdrawal limit of Rs 24,000 a week. It could have at most requested RBI to raise this limit to Rs 2 lakh, rather than making a rather impractical suggestion of increasing the savings account withdrawal limit by over 8 times," said a government official.

Second, RBI underlined that it was not possible for it to relax the withdrawal limits exclusively for candidates and that any such relief would have to be across-the-board. A rapprochement was reached in the RBI-EC standoff only after intervention by the PMO.