Right time for people to start using plastic money, says RBI regional director
There is a possibility that people are hoarding new currency leading to shortage of change in the market, said Nirmal Chand, regional director, Reserve Bank of India, also stressing on the importance of using plastic money. Chand, however, denied that there was any cash crunch at the RBI.punjab Updated: Nov 22, 2016 18:33 IST
There is a possibility that people are hoarding new currency leading to shortage of change in the market, said Nirmal Chand, regional director, Reserve Bank of India, also stressing on the importance of using plastic money. Chand, however, denied that there was any cash crunch at the RBI.
Here are the excerpts of his interview to HT:
How do you see the cash crunch situation in the region?
I won’t say that there is a cash crunch situation in the region. The RBI has been receiving a regular supply of cash from the press and it is distributed to branches on time. But the delay could have happened during the process where the money has to reach its destination. It is also because the public turned out in large numbers.
During the initial days, most of the banks ran out of money. There was a major problem in cooperative banks. Did you come across such complaints?
Initially, the money was distributed to the currency chest which distributed it to cooperative banks and other smaller banks. At times, the currency chest was busy in distributing money to its own bank branches ignoring the cooperative banks. We got complaints, after which we changed the strategy. Now, the RBI directly gives money to the banks. It has quickened the process.
Has the RBI started collecting Rs 500 and Rs 1,000 notes from banks? Has the stock piled up?
There are some banks which are having storage problems. Nearly 15 banks have already deposited the demonetised cash. Many others have been given slots. We have instructed banks to first verify the notes for forgery and then send the money to the RBI, where it is verified again.
Many people are unhappy that even after standing in queues for hours they are receiving soiled Rs 100 notes. Bank unions have also criticised the RBI for reintroducing soiled notes. What do you have to say?
We have told banks that they should segregate soiled notes that are fit to be used by the public. There is a pressure on the press. So to ease its pressure, the RBI thought of re-circulating soiled notes. These notes are not distributed via ATMs but only at banks.
Don’t you think if the Rs 2,000 note was of the same size as that of the Rs 1,000 or Rs 500 note, banks need not have had to recalibrate all the ATMs?
The purpose of demonetisation of high currency was to weed out fake notes. So to make it more difficult for forgers to copy new notes, its features including size had to be changed.
How long will it take to recalibrate all the ATMs and how many ATMs have been recalibrated in Chandigarh to date?
In the region, there are more than 13,000 bank branches and above 15,000 ATMs. In Chandigarh, there are around 476 branches and around 700 ATMs. I have received a report that 60% of the ATMs have been recalibrated to date and remaining will be done in a week’s time.
Why is there a shortage of change in the market?
A. From Saturday, the RBI has started distributing Rs 500 notes. Once the Rs 500 note is in regular supply, people won’t face any difficulty in changing notes, especially Rs 2,000.
Despite directions from the RBI, banks are not giving cash to people who have weddings at home. What do you have to say?
The government and the RBI have both issued these instructions. Banks should adhere to these instructions.
Businessmen are still accepting Rs 500 and Rs 1,000 notes.
It is illegal. It is the job of the enforcement agencies to check that such practices do not happen.
Do you have any other suggestions?
People are hoarding money: The RBI is distributing currency through branches and ATMs but this currency is not coming back to the system. The money which is distributed by banks needs to come back, so that there is more churning. People are hoarding new currency. The situation will only improve when people start depositing new currency with banks.
People should use plastic money: Secondly, the usage of alternate mode of transactions needs to be augmented. People should make their purchase through plastic money. Mobile wallet is another innovative way to make payments. People should inculcate this habit of using plastic money and this is the right time.