Understanding the Cash Limits and the Realities of High-Cash Holdings

The limit of 4500 Rupees pertains to the maximum amount of cash that an individual can withdraw from an ATM in a single transaction or within a specified period, depending on the bank's policies. However, it is common for people to hold more than this limit due to various factors.

Multiples Withdrawals

Individuals can make multiple withdrawals from different ATMs or over multiple days, allowing them to accumulate more cash than the limit in a single transaction. This practice is particularly common for those with legitimate financial needs or for individuals engaging in cash-intensive business activities.

Bank Branch Withdrawals

People can also withdraw larger amounts directly from bank branches. In some cases, the limits on these withdrawals may not be the same as those for ATMs, thus allowing individuals to withdraw and hold more cash than the ATM limit.

Different Denominations

A mix of denominations can also result in a total cash amount that exceeds 4500 even if the individual has a limited number of 2000 Rupee notes. This is particularly true for those involved in cash-intensive businesses, where the nature of transactions often requires a significant amount of cash on hand.

Cash-in-Hand

Some individuals may receive cash through business transactions, loans, or other means that allow them to hold more than the ATM withdrawal limit. This is a common scenario for those involved in legitimate financial activities where large cash holdings are necessary.

Financial Activities and High-Cash Holdings

People engaged in cash-intensive businesses, such as construction, retail, and certain services, frequently hold larger amounts of cash on hand due to the nature of their transactions. While the 4500 Rupee limit is intended to prevent illegal activities like hoarding currency, it does not effectively prevent the accumulation of substantial cash holdings by those who engage in such business.

The Case of a Big Industrial Magnate

Even with the 4500 Rupee limit, some individuals, such as a big industrial magnate, can have bundles of 2000 Rupee notes. Typically, large companies can legally exchange old notes and use the proceeds for various activities, including paying large bribes. This is a reality that is often overlooked in discussions about cash limits and financial regulations.

Misconceptions Regarding Cash Limits

There are certain misconceptions about the limits on cash holdings. It is important to note that these limits are primarily applicable to the common man. Individuals doing business on a larger scale, such as those with a monthly turnover of at least a crore (10 million Rupees), can easily circumvent these limits.

The Irony in Financial Regulation

Given that banks primarily rely on deposits for their income, they have a vested interest in encouraging their customers to keep their money in the bank rather than in cash. The fabricated cash crunch is a tactic used by banks to accumulate more funds. This means that the richer individuals are more likely to have larger cash holdings because their deposits are higher.

The Evolution of Black Money

No one with a substantial amount of unaccounted money would be foolish enough to keep it in cash bundles. Unaccounted money tends to evolve into other forms, such as investments, real estate, or legal deposits. This is why banks and financial institutions are relatively safe when dealing with large sums of money, as the money typically moves from one form to another.

Two Worlds: An Informal Economy

There are two worlds in this scenario. The upper world does not face the same limitations as ordinary citizens when it comes to cash withdrawals. This highlights the disparity in access to financial services and the limitations placed on segments of the population, particularly those with smaller financial capacities.