Soon you can withdraw more cash at your nearby retail stores using their POS devices instead of visiting ATMs or banks. Though aimed at helping rural folks who have to travel long distances to find nearby bank or ATM, RBI's new proposed initiative is understood to help urban populace also as the apex bank is mulling to raise the cash withdrawal limit at points of sale (POS) to Rs.5,000 from the present limit of Rs.1,000.
"It will happen very soon, maybe in a month or two," said a finance ministry official who did not want to be named, reports Livemint.
At a PoS in a retail store, payments are accepted through a swipe machine. The same machine can be used for cash withdrawals as well. When a customer swipes his debit card to withdraw money from his account using POS machine at a merchant's place, he would get cash from the merchant while the money from the customer's bank account would get transferred instantly to the merchant's account.
Banks, especially State Bank of India (SBI), have been demanding an increase in the limit for a while now as it will ease pressure on automated teller machines (ATMs). ATMs require space, involve cash-handling expenses, expenses on employees (security guards are mandatory in all ATMs) and other expenses such as closed-circuit television cameras.
"I think PoS can be used in areas where ATMs are far away and people need to travel to withdraw cash," said SBI chairperson Arundhati Bhattacharya. She also added that though SBI had earlier recommended to raise the limit to Rs.5,000 for PoS, it should be allowed to even give cash up to Rs.10,000.
IDBI Bank Ltd executive director R.K Bansal, however, is not sure if RBI will increase the limit soon or by that amount. "I think it will be increased to Rs.2,000-2,500," he said.
Though withdrawing from PoS entails charges in the range of Rs.7.50-10, a part of which is paid to the merchant, customers may find it attractive since now even ATM transactions have charges attached. However, a few banks such as IDBI Bank levy no charges as of now.
However, increasing the cash withdrawal limit may pose the problem of shortage of cash at PoS, especially given that there is less cash collection there owing to increasing card transactions. "Though the idea is not to encourage cash withdrawals, if too many people start cash withdrawals at PoS, it may be a problem," said Bansal. For merchants with high cash collection, it may turn out to be beneficial as it will save them from depositing high amounts of cash with banks.
The MoF official said that ways have to be devised to incentivize PoS merchants for handling cash.