Payday spells fresh cash headache for employees, banks
30 Nov 2016
Banks are set to face their next big post-demonetisation test as the month-end payday arrives for lakhs of salaried employees and pensioners. Although the Reserve Bank of India has optimistically ruled out any impact of demonetisation on payment of salaries to either government or private sector employees, another round of serpentine queues at ATMs and a shortage of lower denomination notes are on the cards.
The Indian Banks' Association (IBA) has issued an advisory to banks to maintain adequate cash, but this is obviously easier said than done. Bankers say the supply of cash was much lower than demand.
''Since Rs500 and Rs100 denomination notes are only now being printed, the branches and automated teller machines are running out of cash frequently,'' the chief executive of a public sector bank told The Hindu. The presses have stopped printing Rs2,000 notes for the time being, several bankers pointed out.
To beat the imminent cash crunch, banks are setting their own daily cash withdrawal limits per account, while the government has asked private companies to make payments to employees digitally. According to an Indian Express report, banks have suggested to large companies that they should give prepaid cards to their employees in lieu of cash.
''We are making arrangements so that there aren't any problems in the days to come. There should not be any inconvenience to the salaried class, pensioners or any section of society. We have made arrangements, and will be able to say whether these are adequate or not only on the day when money comes into the accounts of pensioners and salaried people. We're hopeful that there won't be any problems,'' a top official of the Bank of Maharashtra told The Indian Express.
In a bid to relieve pressure on banks, the government on 17 November allowed its Group C employees, including those of public sector undertakings, defence and railways, to draw up to Rs10,000 of their salaries in advance. Several ministries have also deployed point of sale (POS) machines within the office premises to dispense cash for staffers, in a bid to take some pressure off the banking system.
In an interview to PTI last week, RBI governor Urjit Patel said the central bank was monitoring the situation on a daily basis and urged people to start using debit cards and digital wallets. This will make transactions cheaper and easier, helping India reduce the use of cash and bring it on par with developed nations, he said.
The RBI has also doubled the limit on balance that can be kept in prepaid wallets and cards to Rs20,000 till 30 December to ease the situation.
