Three-day bank holiday from today likely to deepen cash crisis | business-news | Hindustan Times
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Three-day bank holiday from today likely to deepen cash crisis

A three-day bank holiday from Saturday could deepen the nationwide cash crisis with refilling of ATMs is likely to be affected, potentially impacting millions of Indians struggling to withdraw money for over a month

black money crackdown Updated: Dec 10, 2016 12:45 IST
A hand-written sign indicates the status  of an ATM in Gurgaon
A hand-written sign indicates the status of an ATM in Gurgaon(Parveen Kumar/Hindustan Times)

A three-day bank holiday from Saturday could deepen the nationwide cash crisis with refilling of ATMs likely to be affected, officials said, potentially impacting millions of Indians struggling to withdraw money for over a month.

While Saturday and Sunday are regular weekend holidays, banks will remained closed on Monday for Id-e-Milad.

In a normal situation when banks have consecutive holidays, additional cash is supplied to cash logistics firms which are responsible for ATM management. These firms can also collect cash from the currency chests with the country’s banks, officials said.

“…At present, there is an acute shortage of cash and we cannot give these companies enough cash even for a day, so how can we give them extra…the situation will be gravely affected,” said a senior executive at a private sector bank.

A bank workers’ association also said the situation could turn desperate.

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“There will be problems getting cash from ATMs…in a situation where cash is already in short supply, there is a possibility of things getting even tighter,” said Ashwani Rana, vice-president of National Organisation of Bank Workers, an affiliate of the Bharatiya Mazdoor Sangh.

Prime Minister Narendra Modi has defended the government’s decision to recall high-value banknotes, saying short-term pains will bring big gains in the long run.

However, the initial public support for the demonetisation – which the government said was aimed at tackling black money and counterfeit currency -- appeared to be waning with the banks and ATMs failing to dispense enough cash to meet the demand.

The cash shortage has also affected Parliament’s winter session with the opposition and ruling parties clashing over the issue, both inside and outside the House.

A private sector banker said that although about 95 per cent of the two lakh-odd ATMs have been recalibrated, there is cash shortage due to logistics issue. ATMs are fed only once a day and most of them are running out of money quickly due to heavy withdrawals.

Bankers expect that the situation would continue for another 10-12 days.

Bankers on the condition of anonymity said despite assurances by the Reserve Bank of India (RBI) and the government, they are not getting adequate cash from currency chests to meet the withdrawal pressure on account of pay day.

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Faced with the cash shortage, banks have imposed their own limits for withdrawal as low as Rs 2,000 in some cases against the limit of Rs 24,000 per week set by RBI.

Frustrated with standing in long queues, people at times are venting their anger at bank officials and asking them to compensate them for not being able to keep their promise of providing Rs 24,000 per week to a person, similar to what bank charges when a customers fails to maintain minimum balance in the account.

“Because of the acute short supply of cash, and when branches are unable to meet the requirements of cash withdrawals, irritated customers are naturally becoming angry, and annoyed and their anguish is turned towards the staff, officers and managers,” All India Bank Employees’ Association said in a statement.

To promote less cash economy, the government has announced slew of measures incentivising payment through digital mode for purchase of petrol, diesel, insurance cover, railway tickets etc.

It also waived service tax for payments up to Rs 2,000 made through cards and decided to do away with transaction fee for payment to central government departments and PSUs.

(With agency inputs)