Banks facing Pay Day test, RBI to drastically hike supply

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demonetizationWith central and state governments crediting salaries and pensions to millions of accounts on December 1, a majority of bank branches are yet to lay their hands on the new Rs 500 notes and Rs 100 notes were in short supply too.

To offset the cash shortage, four currency printing presses—two belonging to Reserve Bank of India (SBI) and two state-owned ones—have now started working three shifts in a bid to increase the supply of Rs 500 notes to help banks meet the Pay Day demand, likely to be felt by the banks, both public and private, till December 7.

Due to the cash crunch, the banks are only disbursing Rs 10,000 instead of the stipulated Rs 24,000 per week and Rs 2,500 from ATMs. Bank unions have advised the banks to seek police protection for employees from angry customers during rush days.

The supply of currency notes to state-run banks has increased where the salaries of government employees are credited into their accounts. Also, there are many private firms, which hold accounts with these banks.

Such is the cash crunch—a bank employee was quoted by media reports as saying before demonetisation, during the salary season, the banks used to get Rs 8,000 to Rs 10,000 crore to be distributed across ATMs daily across the country. Now the cash supply is around Rs 2,000 crore.

Private banks, which are enforcing withdrawal limits; this was on top of those set by the government; are the most affected. At the central level, there are 58 lakh pensioners and around 50 lakh employees .

While this was so, banks are considering to set up extra counters for withdrawal of cash during the massive Pay Day rush.

Meanwhile, the Opposition said that the central government has not made proper arrangements to supply cash. The common people were being punished for no fault of their own, following demonetisation. It added though government had promised to set right the situation following demonetisation, but that was yet to be seen.