Demonetisation blues continue, storing ‘dead cash’ now a major problem
Banks, post offices and cash logistics companies that manage ATMs are grappling to keep up with the unprecedented demand from customers even four days after Prime Minister Narendra Modi announced demonetisation of Rs 500 and Rs 1000 bank notes.business Updated: Nov 13, 2016 09:12 IST
Banks, post offices and companies that manage ATMs are grappling to keep up with the unprecedented demand for cash even four days after PM Narendra Modi announced the demonetisation of Rs 500 and Rs 1,000 notes.
The problem does not end there. According to sources, as piles of “dead” cash start pouring in, banks and cash logistics companies are struggling to store these piles along with the new currency.
Finance minister Arun Jaitley said on Saturday that an estimated deposit worth `2 lakh crore has been received by banks. Besides, post offices have also been receiving deposits of defunct banknotes.
The old cash will eventually go back to the Reserve Bank of India for disposal, but the time lag means that facilities storing the dead currency now are bursting at the seams. “Over the last 48 hours cash logistics companies have brought back old high denomination bank notes from more than 90% of the ATMs. Bank currency chests do not have adequate storage capacity to hold the volume of currency,” Rituraj Sinha, president, Cash Logistics Association, told HT.
Ahead of the demonetisation exercise, `17 lakh crore of currency was in circulation in the country. Of this over 86% comprised high denomination notes of Rs 500 and Rs 1,000, in volume terms this makes for 22%. This means about Rs 15 lakh crore will be sucked out of the market.
Cash logistics companies that manage cash supply to ATMs have about 250-300 vaults across the country. Besides, the banks also have their own currency chests. “This is not enough to store the pile of cash that is coming back to us,” said a bank official, who did not wish to be identified.
While chiefs of public and private lenders said that they were adept at handling the pressure, things have gone out of hand with a mad rush to exchange the old notes. “Banks are absolutely prepared to handle this pressure and we are monitoring the situation round the clock, but we have been maintaining that it will take about a week to 10 days for the situation to normalise,” said a senior government official on condition of anonymity.