 "Cash shortage across India: Banks disburse Rs 5,000-10,000 per person")
There was chaos once again on the streets as salaried employees and pensioners queued up on payday outside bank branches and automated teller machines (ATMs), to get hold of some currency notes to meet their monthly bills and obligations.
Business Standard reporters, spread across the nation, witnessed waning patience levels of the common people and saw frequent arguments with bank officials as many branches ran out of cash even as functioning ATMs quickly dried up. However, common people were still cooperating with bankers, realising they have little control over the situation, in the face of acute cash shortage.
Cash management companies confirmed that banks have suggested they fill ATMs lightly so that the available cash can be spread out across all the centres. The ATMs are running at only 10-20 per cent of their capacity. Vendors said the task force constituted under Reserve Bank of India (RBI) Deputy Governor S S Mundra has managed to recalibrate close to 85 per cent of the 200,000-plus ATMs in the country.
The people were still short of cash the new Rs 500 notes were still a novelty for many. But sources said hoarding of Rs 100 notes had lessened to some extent, but Rs 2,000 notes were still a non-starter for regular transactions.
The demonetisation drive resulted in the scrapping of Rs 14.95 lakh crore of high-value notes.
Rating agencies have already warned that the note ban will hit the economy badly. CRISIL said on Thursday the sluggish infusion of replacement notes in the system and the ensuing “cash choke has pulled back the business cycle, which was beginning to accelerate on the back of a good monsoon, the Seventh Pay Commission pay hike, and the One Rank One Pension scheme for veterans”.
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“Assuming that it will take at least a couple of months for the situation to normalise, we have sliced 100 basis points off this financial year’s GDP growth to 6.9 per cent from 7.9 per cent estimated earlier,” the rating agency said. One good thing about the drive, though, would be that it would also drag down inflation, CRISIL said.
Similarly, India Ratings revised its GDP growth forecast for the country for FY17 to 6.8 per cent, from 7.8 per cent.
“The downward revision is a fallout of the disruption caused at various levels in the economy due to the de-legalisation of banknotes…. Ind-Ra’s analysis shows that the economic cost of the de-legalisation will be Rs 1.5 lakh crore for FY17,” the rating agency said, adding economic growth would fall to three-year low.
Payday pain
In Telangana and Andhra Pradesh, queues were back, only longer than the initial days of demonetisation. Government staff and pensioners joined in as they were extended a special cash facility in banks by the two state governments.
Police were deployed to manage the crowds at branches of public sector banks in Hyderabad and other places while customers were seen arguing with bank officials on giving priority to government pensioners and government staff with separate queues for them.
Starting Thursday, banks have been disbursing Rs 10,000 in cash each to the pensioners and staff of the state governments on the government's request.
This has put further pressure on banks as many branches of public and the private sector banks continues to put out “No Cash” boards within hours of opening for the day, as they were short of cash. Banks have now been asked to ration cash to each individual depending upon daily footfalls at respective branches so that people standing in queues not return empty-handed.
In Tamil Nadu, bank branches put restrictions on how much cash each person could withdraw even as the government transferred the entire Rs 1,300 crore of its monthly salary commitment for its 1-1.5 million employees, said J Ganesan, president of Tamil Nadu Secretariat Association.
The state transport department also managed to offer a small amount of cash for each employee, from the collection it gets from the trips, sources said.
Other government employees had to stand in long queues to withdraw money, which was also rationed, said Tamil Nadu Government Employees Association General Secretary R Balasubramanian. While RBI allows each person to withdraw Rs 24,000 a week, banks were able to offer around Rs 10,000 considering the shortage of currency notes, he said.
The situation was a little better in and around Kolkata but in suburban and rural areas of West Bengal, it was no different than the rest of the country.
In Kolkata, banks said their cash reserves were enough to meet the pressure on account of withdrawals on payday.
“There are queues outside ATMs, but we have enough cash reserves to meet the demand. RBI had asked us for projected demand, and they have provided sufficient cash ahead of payday,” said Pawan Kumar Bajaj, managing director and chief executive officer, United Bank of India.
However, a number of ATMs remained closed as they could not be replenished. According to bankers, ahead of payday, RBI had increased cash supplies to meet the demand.
In certain areas of rural Bengal where there was a cash crunch, some of the branches had to impose rationing. Thus, pensioners could withdraw only up to Rs 10,000, while the limit for non-pensioners was Rs 5,000.
Interestingly, sales of petrol fell on Thursday as the government’s window to use old high-denomination notes at petrol pumps came to an end. In addition, some of petrol pump owners complained they were not able to deposit the Rs 500 notes (accepted to sell fuel) at banks.
“The banks are saying they have received a notification which states that approval from financial authorities is needed to deposit the cash in the current account. This is creating a major problem for us,” said Saradindu Pal, general secretary of the West Bengal unit of All India Petroleum Dealers’ Association.
In Lucknow, people lined up at banks and ATMs, but no scenes of panic were witnessed. It was business as usual at petrol retail outlets with no rush observed, compared to the past few weeks following demonetisation. A large number of people have since switched to using cards to buy fuel.
Monthly salaries and pension payouts in Uttar Pradesh is estimated at Rs 10,000 crore for state government employees and pensioners and till Wednesday, under Rs 1,000-crore worth of currency notes had been sent to different banks in the state.
In Mumbai and Maharashtra at large, bank customers in queues said they were worried about getting enough cash to make monthly payments.
A housewife standing in a queue at a branch of a public sector bank at Thane said cash payments for domestic help, whose remuneration is generally higher than other cities, was becoming a problem. Getting Rs 100 notes was still a problem and moving everyone to the digital platform would take a long time, was the word on the street.
There were long queues at branches and ATMs of public sector banks, including State Bank of India, and private banks such as HDFC Bank. Some SBI group ATMs were dispensing only Rs 2,000 notes.
Senior public sector bank executives said there was rationing of currency notes to meet demand in the payday week. Though RBI has infused fresh currency notes, the gap between demand and supply remained wide.
But in some pockets of Mumbai, business continued as usual even as queues could be seen outside ATMs.
According to a branch manager of SBI, the bank had made special arrangements to stock up ATMs in the evening, anticipating heavy rush from people withdrawing money after office hours.