New Delhi, Nov 30: Long queues are set to return outside Banks and ATMs across the country as employees will flock to withdraw money on first pay day after demonetisation of Rs 500 and Rs 1000 currency notes. Several bank branches have been scrambling for cash since the ban on high denomination notes and the pay day on December 1 when the government, companies, and domestic employers pay salaries to their staff, will add to their woes. In order to beat the cash shortage on pay day, banks have set internal daily cash withdrawal limits per account, while the government has asked private companies to pay salaries to employees digitally.
Banks and ATMs are currently running on nearly 40 per cent less cash than they would need. Moreover, many banks are refusing withdrawal of Rs 24,000 and ATMs dispensing only Rs 2,000 notes. The ban on Rs 500 and Rs 1000 notes, which amounted 86 per cent of the total currency in circulation, has caused massive cash crunch in the country. “This payday will turn into pain-day as banks will not be able to meet the demand simply because the system does not have enough cash. This will restrict people in withdrawing their salaries and even pensions,” CH Venkatachalam, general secretary, All India Bank Employees’ Association, told Hindustan Times.
The shortage of cash and new notes can be understood by the data released by the Reserve Bank of India. Between November 10 and November 27, people could withdraw Rs 2.16 lakh crore from their bank accounts and ATMs, as against Rs 8.11 lakh crore of deposits of old notes during the same period.
Since banks are not receiving the amount of cash they actually need, they have put a cap on withdrawal on individual accounts. Many banks are not allowing people to withdraw Rs 24,000. “We have fixed daily cash withdrawal limit of Rs 3,000 per account as of now. We don’t have enough cash to meet the demand,” an executive of the Catholic Syrian Bank in Mumbai was quoted as saying by The Indian Express. “Most people want to withdraw Rs 24,000, the cap set by the government for withdrawal in a week, as they have to pay their drivers and domestic helps. But we exhaust the cash in a few hours as we are not getting enough supply,” said an official at the Corporation Bank’s branch in Delhi’s Mayur Vihar.
In a bid to relieve pressure on banks, the government suggested companies to make salary payments to their employees through debit cards or credit cards. Several ministries have also deployed point of sale (POS) machines within the office premises to dispense cash for staffers.
Before the ban on Rs 500 and Rs 1000, each of the 200,000 ATMs in the country could hold Rs 6.5 lakh. Half of them needed to be filled twice a day in the first fortnight after Pay Day. But after demonetization of Rs 500 and Rs 1000, an ATM can only have Rs 2.5 lakh a day. With such small amount, ATMs go cashless within hours. The cash crunch-hit people and banks are now bracing for more pain on December 1.