It is salary time for all the states. The notes crunch will make all the difference this time. While the employees are used to cash payments and direct credit into the banking system and blind withdrawals, this time it could limit to just Rs 10000 or Rs 14000 on the first day of December.
There could be very few employers who will be able to pay in cash. The Telangana Government led by K Chandrasekhar Rao has made arrangements with the RBI office locally to give the first Rs 10000 in cash to the Government employees. However AP government is depositing it in the banks .
The Indian Banks’ Association (IBA) has issued an advisory to banks for maintaining adequate cash in view of the rush at the beginning of the month and maintain normalcy.
Bankers are preparing for another hectic spell over the next few days as salaries and pensions will get credited from Wednesday even as many bank branches, particularly in the urban areas, were closed on Tuesday after they ran out of cash.
However, bankers said the supply of cash was much lower than the demand. “Since Rs 500 and Rs 100 denomination notes are only being printed now, so the branches and automated teller machines are running out of cash frequently,” said the chief executive of a public sector bank. Printing presses have stopped printing Rs 2000 notes for the time being, several bankers pointed out.
Several banks said that as many as 50 per cent of the branches of various banks in some metro cities run out of cash. Bankers said since they have to disburse Rs 35,000 crore to the rural centres by middle of December in view of the rabi harvest season, urban centres are facing shortage in supply of currency.
Some of the bank branches have also started rationing cash disbursement, allowing individuals to only withdraw Rs 5,000 or Rs 10,000 as against the Rs 24,000 weekly limit set by the Reserve Bank of India.
“We were seeing demand of Rs 10,000 of cash everyday from our bank. If you add the demand for salary, pension withdrawals as well as demand for farmers ahead of rabi season, the amount will certainly go up. Supply of cash remains an issue,” said another top official of a large public sector bank.
To substitute the demand for additional cash, banks have also started offering prepaid cards, another chief executive of a south India-based bank said. “We are trying to convince our customers to accept a part of the amount in prepaid cards,” the banker said. He also added banks are installing point-of-sale terminals in a big way to enable cashless transaction.
