Mumbai, Jan. 3: The Reserve Bank of India (RBI) today asked banks to step up the allocation of cash to rural areas. Banks should distribute at least 40 per cent of currency notes in the rural areas.

The central bank came out with this directive as even after the expiry of the 50-day demonetisation deadline, rural areas continue to face a cash crunch. The restrictions on withdrawals from bank branches and ATMs are adding to the woes.

Pointing out that bank notes being supplied to rural areas were not commensurate with local requirements, the RBI today asked banks maintaining currency chests to ensure that at least 40 per cent of the notes are supplied to rural areas.

Currency chests are select branches of banks which are authorised by the RBI to stock or distribute notes and coins. There are more than 4,000 such chests in the country of both public and private banks.

"Banks should advise their currency chests to step up issuance of fresh notes to rural branches of regional rural banks, district central co-operative banks and commercial banks, white label ATMs and post offices in rural areas on a priority basis," a circular issued by the apex bank said.

The directive came just a couple of days after Prime Minister Narendra Modi in his address to the nation on New Year's eve exhorted banks to try and restore normalcy as fast as possible and to focus on rural areas.

According to the RBI, banks should follow a need-based approach for the supply of currency as rural requirements could vary from district to district, depending on variations in the rural and urban mix of each district.

"A certain percentage of allocation has been assigned to each district depending on the rural and urban mix. Accordingly, all chests operating in a district must issue bank notes to the above mentioned distribution channels in the indicated proportion," the apex bank said.

Foreign citizens

The Reserve Bank today said foreign citizens can exchange foreign currency notes for Indian currency up to a limit of Rs 5,000 per week till January 31. Earlier, the facility was available till December 15, 2016 and later extended till December 31, 2016. While exchanging the notes, the foreign passport holder will have to submit a self-declaration that the facility has not been availed of during the week.