Cash crunch in cities continues as RBI turns focus to villages
29 November 2016
Banks and automated teller machines in Delhi, Mumbai and other cities were strapped for cash on Monday as the supply of notes by the Reserve Bank of India continued to fall short of demand, leaving those awaiting their month-end payday filled with trepidation.
While the lack of new Rs500 notes was especially acute, bankers said currency supplies had improved from last week but not enough to meet customer requirements as the central bank turned its focus to the villages, where the economy is more heavily dependent on cash and where distress could be acute since branches and ATMs are more widely dispersed than in urban areas.
Long queues were seen outside ATMs in Mumbai, Delhi and Kolkata while many others were out of cash despite being tweaked to dispense the new, smaller-sized Rs 2,000 and Rs 500 notes.
''The focus may have shifted to rural India, which is heavily dependent on cash,'' said a banker quoted by The Times of India. ''As a result, metros and cities may be facing a cash crunch.''
Based on information from sources - RBI has not been providing daily data about supply or demand - ToI reports State Bank of India, ICICI Bank and HDFC Bank to have received Rs20 crore each in Mumbai while Axis Bank received twice that. For Delhi operations, SBI, ICICI Bank and Axis Bank received Rs21 crore each while HDFC Bank and Oriental Bank of Commerce got Rs40 crore each.
Reserve Bank of India governor Urjit Patel told PTI on Sunday that RBI was taking all necessary steps to ''ease the genuine pain of citizens''.
The decision to demonetise Rs500 and Rs1,000 notes on 8 November as a strike against black money, corruption, fake currency and terror financing meant 86 per cent of the currency in use ceased to be legal tender. RBI has been unable to meet demand for new notes, which is having a knock-on effect on businesses dominated by cash such as retail.
Viren Shah, president of the Federation of Retail Traders Welfare Association that represents 100,000 shops in Mumbai, said business has suffered due to the shortage of cash. ''Retailers have cancelled orders from manufacturers and wholesalers fearing poor demand,'' he said.
He said almost 150 big standalone stores such as Roopam, Roopmilan, Benzer, Asiatic and Metro Shoes are willing to provide cash at point-of-sale (PoS) machines just like Big Bazaar, allowing customers to swipe cards and withdraw up to Rs2,000 from their account.