Demonetisation blues: Banks brace for chaos as payday approaches
Assurances from the Reserve Bank of India (RBI) and the central government that they have taken all the necessary steps to counter the payday rush haven’t done enough to dispel their fears.black money crackdown Updated: Nov 26, 2016 07:17 IST
With payday barely a week away, banks across the country are bracing for a possible surge in demand for cash that people would need to pay their household bills.
Assurances from the Reserve Bank of India (RBI) and the central government that they have taken all the necessary steps to counter the payday rush haven’t done enough to dispel their fears.
To take some of the pressure off banks, the Centre started giving its junior employees a cash advance of Rs10,000 this week. The governments of Haryana, Maharashtra and Andhra Pradesh also want banks to provide paper currency that can be disbursed as salaries among their employees. Non-gazetted employees of the Delhi government, police and the New Delhi Municipal Council have been given the option of drawing a cash advance.
The demonetisation exercise announced by Prime Minister Narendra Modi on November 8 sucked out nearly 86% of the total currency (amounting to Rs14 lakh crore) in circulation across the country, leading to thinning cash supply. This not only hit individual households but also companies that often paid part of its perks in cash.
According to the RBI, about Rs1.36 lakh crore had been pumped back into the system until November 21.
However, a senior government official claimed no employee – whether public sector or private – has cause for worry. “There will be no problem with the cash supply,” he said.
An RBI official also gave his assurance that all necessary steps were being taken to prepare for the big day.
Nevertheless, both public and private companies are leaving no stone unturned to prevent a meltdown when payday arrives – whether it involves installing micro-ATMs on their premises or allowing partial withdrawal of the salary in cash.
While public sector giant BHEL gave its employees the option of taking Rs10,000 in cash advance, power major NTPC assured workers that the bank branches and ATMs on its campus won’t run out of money.
Telecom firm MTS India, which has an ATM machine at its corporate office in Gurgaon, constantly urges the bank to replenish its cash. Ixigo, a travel search marketplace, has begun offering free lunch and shuttle services to its employees. Sunaina Mattoo Khanna at Bajaj Capital said office boys have been allocated to employees who are too busy to stand in bank queues.
While some firms – such as VLCC Healthcare – are paying salaries in notes of low denomination, others let their employees take a few hours off to finish their banking chores. Financial assistance has also been made available to those hardest hit by the cash crunch.
Companies like Infosys and Mahindra & Mahindra have installed micro-ATMs in their offices.