Bankers are preparing for another hectic spell over the next few days as salaries and pensions will get credited from Wednesday even as many branches, particularly in the urban areas, were closed on Tuesday after they ran out of cash.
The Indian Banks Association (IBA) has issued an advisory to banks to maintain adequate cash in view of the rush at the beginning of the month and maintain normality.
However, bankers said the supply of cash was much lower than the demand. “Since Rs. 500 and Rs. 100 notes are only being printed now, branches and automated teller machines are running out of cash frequently,” said the chief executive of a public sector bank. Printing presses have stopped printing Rs 2000 notes for the time being, several bankers pointed out.
Several bank CEOs told The Hindu that as many as 50 per cent of the branches of various banks in some metro cities run out of cash.
Bankers said since they have to disburse Rs 35,000 crore to the rural centres by middle of December in view of the rabi harvest season, urban centres are facing shortage of currency supply.
Some bank branches have started rationing cash disbursement, allowing individuals to withdraw only Rs 5,000 or Rs 10,000, against the Rs 24,000 weekly limit set by the Reserve Bank of India.
“We were seeing a huge demand for cash everyday from our bank. If you add the demand for salary, pension withdrawals as well as demand for farmers ahead of rabi season, the amount will certainly go up. Supply of cash remains an issue,” said another top official of a large public sector bank.
To substitute the demand for additional cash, banks have started offering prepaid cards, another chief executive of a south India-based bank said. “We are trying to convince our customers to accept a part of the amount in prepaid cards,” the banker said. Banks were installing point-of-sale terminals in a big way to enable cashless transaction.
The government wants banks to install three million terminals over the next three months. There were over 14 million PoS terminals in the country as of end August, RBI data showed.
