1. Pay day rush: Banks cut withdrawal limits, ask companies to give prepaid cards; employees worry long queues

Pay day rush: Banks cut withdrawal limits, ask companies to give prepaid cards; employees worry long queues

The next big test of banks is meeting month-end demand of lakhs of salaried employees and pensioners. Also, to beat the imminent cash crunch, banks are setting internal daily cash withdrawal limits per account.

By: | Published: November 30, 2016 11:47 AM
In a bid to relieve pressure on banks, the government, on November 17, allowed its Group C employees, including from PSUs, defence and railways, to draw salaries up to Rs 10,000 in cash in advance. In a bid to relieve pressure on banks, the government, on November 17, allowed its Group C employees, including from PSUs, defence and railways, to draw salaries up to Rs 10,000 in cash in advance.

The next big test for the banks is here! Wondering what is that? We’ll tell you. The next big test of banks is meeting month-end demand of lakhs of salaried employees and pensioners. RBI has ruled out any impact of demonetisation over payment of salaries to either government or private sector employees. But the salaried are not ruling out another round of serpentine queues at ATMs and a terrible shortage of lower denomination notes. The Indian Banks’ Association (IBA) has issued an advisory to banks for maintaining adequate cash in view of the rush at the beginning of the month and maintain normalcy, says a Hindu report. However, bankers said the supply of cash was much lower than the demand. “Since Rs 500 and Rs 100 denomination notes are only being printed now, so the branches and automated teller machines are running out of cash frequently,” chief executive of a public sector bank told The Hindu. Printing presses have stopped printing Rs 2000 notes for the time being, several bankers pointed out.

Also, to beat the imminent cash crunch, banks are setting internal 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 payment cards to their employees in lieu of cash, industry sources said. “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 Indian Express.

In a bid to relieve pressure on banks, the government, on November 17, allowed its Group C employees, including from PSUs, defence and railways, to draw salaries up to Rs 10,000 in cash 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 Rs 20,000 till December 30 to ease the situation.

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