The finance ministry said, Customers can now withdraw up to 2,500 rupees a day from cash machines, rather than 2,000.
Long queues at many banks were making it difficult to make withdrawals.
Many cash machines have not been adapted for the new 500 and 2,000 rupee notes.
“Since the move was announced on Tuesday night, Indian banks had received 3 trillion rupees of large denomination notes,” The government said.
The 2 notes accounted for more than 4-5th of the currency in circulation and the change threatens to disrupt much of India’s cash-driven economy.
The abolition of the 1,000 and 500 rupee notes is intended to crack down on corruption and bring cash worth billions of dollars in unaccounted wealth back into the economy.
Removing the 10,000 rupees a day restriction and increasing the weekly limit by 4,000 rupees to 24,000, The government has also relaxed withdrawal limits from banks.
Rupees were available “when they need it” The Reserve Bank of India urged people not to hoard cash.
The amount of cash withdrawn and exchanged to give a more accurate picture of circulation, It has asked banks to report daily rather than fortnightly.
Prime Minister Narendra Modi acknowledged the “pain” being experienced by millions but said the scheme was “not born from arrogance”.
“After 30 December, I promise to show you the India that you have always wished for. Please, 50 days, just give me 50 days.” He said in a speech in Goa on Sunday, “This hardship is only for 50 days.” Indians have until 30 December to exchange the now-defunct notes at banks.
According to investment firm Ambit, The “black economy” could account for about a fifth of India’s GDP. Mr Modi has pledged to crack down on “black money” kept hidden from authorities, Since being elected in 2014.
They would unite to fight the abolition of the high denomination notes, His political opponents said.
Mr Yadav said, “The government has spread anarchy in the country, the common man cannot buy daily products.” Mulayam Singh Yadav, leader of Samajwadi party, called on the prime minister to reverse his decision.