Banks planning to ration cash to meet pay day demands

The situation has surely gone worse with people now having to deal with total cash payments to domestic helps, drivers, grocery bills.

“The supply of notes of 100 rupee denomination has nearly dried up”.

The Indian Banks’ Association (IBA) has issued an advisory to banks to maintain adequate cash, but this is obviously easier said than done. “In our bank there would be no shortage of cash”, Central Bank of India Executive Director R C Lodha said. High value bank notes of RS 2000 and Rs 500 will be dispensed for such withdrawals.

Per the citizens and bank officials who are part of various circles, many ATMs still do not have the cash as many banks are only receiving one fourth of their cash requirements from the back end. “Now we are getting around Rs 2,000 crore which is awfully inadequate”. It seems the Rs 100 note has remained elusive with most of it being hoarded by people who exchanged Rs 500 and Rs 1,000 notes.

Nem Singh, 44, a tailor at an export factory in Kondli, said, “I was paid my salary of Rs 13,000 in cheque this time”.

All the banks have said that they are running short of cash and need to allocate currency to the branch customers.

“Payday worries are overdone”, he said. Bankers said this was aggravating matters. They reportedly have enough money in stock and people can come to their branch and withdraw a maximum amount of Rs 24,000.

A resident of Mayur Vihar, Chirag was not allowed to deposit Rs 4,000 as he didn’t carry his identity card to the bank. Printing presses have stopped printing Rs 2000 notes for the time being, several bankers pointed out. Amid this, there was consternation for Jan Dhan account holders after RBI set a monthly withdrawal limit of Rs 10,000. “We are making arrangements so that there aren’t any problems in the days to come”.

Southern India was also feeling the pinch. Many branches too have limited cash. We are giving priority to the branches that have a lot of salary accounts because of payday.

Bankers said they were rationing withdrawals so that more customers were catered to.

A senior official in the State government said salary of employees would be credited in the bank accounts as usual and there was no move to disburse salary in cash. “We can not do anything on our own”, the official added. “We are hoping we can meet the demand”.

Almost all the 230 currency chests in the State have no currency stocks as notes received from the RBI are being disbursed to customers on a daily basis. RBI is also gearing up to mitigate the challenges likely to be faced due to this rush.

The demonetization of 86% of India’s cash in circulation is also indirectly boosting the country’s emerging digital payments market.

What is adding to the confusion is the lack of regular updates either from the government or the Reserve Bank of India on the evolving situation.

They have no alternative, because there just isn’t enough cash going around.

State-owned bank officials rejected this contention.

Each currency chest caters to around 50 branches. “They asked me to go to RBI”.