Demonetisation has sucked almost 85% of the cash from the system and after that RBI has put limit on cash withdrawal from bank accounts .Govt has shifted their gears and ask public to shift to digital payment and taken other steps to improve the situation but even after these measures there is still problem of Shortage of cash. We held a brainstorming session with our team to get a solution for this problem and reached at a conclusion that this problem has two major components :
- By Supply side :Means Printing of New notes by RBI
- By Demand side : Cash withdrawal by Public
The govt has tried to work on both of above , First part has been addressed by printing of Notes in three shifts and second part has been addressed by motivating public to use digital transactions.But the very nature of public can only be changed in long term.
Further ,First part ie supply side can also be increased if we increase circulation/rotation of New notes through banks means Public holding new notes in excess of their requirement should be discouraged.
To encourage people to deposit excess cash in to banking channels we have drafted a Sample scheme.
The details of Draft Scheme is given as under
- Draft Cash Deposit FDR scheme 2017
- Scheme Opening Date :01.01.2017
- Scheme Closing Date :31.03.2017
- Condition of the scheme: Any body can enroll under this scheme by depositing Cash after 01.01.2017
- Period :One Year
- KYC : PAN not required at the time of deposit.
- Interest Rate : 9%(More than 2% by normal rate)
- Maximum/Minimum Limit :Minimum Rs 10000/- and multiple of ten thousand ,No maximum limit
- TDS : Not applicable on Interest
- Place for opening accounts :Banks/Post office
- Income Tax: Not applicable on maturity but applicable on premature withdrawal.
- Draft Cash Deposit FDR scheme 2017(contd)
- Withdrawal on Maturity: Only through credit in saving Account.
- Premature withdrawal :Can be made but amount will be credited in saving account and Interest rate shall be applicable as per normal bank interest rate applicable for such holding period.
- Purpose of Scheme: Mobilisation cash from Public holding more than requirement.
- Target of Scheme:Rs 1,00,000 Crore (after that scheme may be closed)
- Benefit to Govt : Cash position will improve and queue will be shortened.
- Cost to Govt/banks : 2 % of amount deposited
- Benefit to Public:Higher interest and Tax free Income
- Justification of Scheme:It will improve working conditions in banks by rotation of cash and improve supply side of the problem.Further bank are also losing @ 1`%for removal of charges on digital payment and Govt is also giving prizes to the tune of 350 crore (appox).Moreover this scheme also encourage people to hold less cash with them.Further Govt is already giving higher rates for small saving.