Chaotic queues got longer on Wednesday as people in large numbers gathered at banks after monthly salaries got credited in bank accounts- the first pay day since the scrapping of Rs 500 and Rs 1000 notes, a move which has created an unprecedented cash crunch across the country.
Queues outside the banks are expected to get only longer tomorrow as many more will gather up at banks and ATMs to withdraw salaries.
Most private companies in India credit salaries to their employees on the last day of a month even as labour laws allow wages to be disbursed on any day before the 10th of the next month.
As soon as the salaries were credited, millions of employees began queuing up outside banks and ATMs across the country to withdraw cash to meet their monthly needs and pay their domestic helps, drivers and clear their monthly grocery and other bills.
Since the supply of notes from currency chests has failed to keep pace with the demand for cash after 86 per cent of currency in circulation was declared illegal on November 8, the chaos worsened on the payday as more households needed cash than earlier.
Several banks ran out of cash within hours of opening. Some bank officials complained that they were getting cash much below what they need.
Making matters worse, a large number of ATMs are still dry even 23 days after the government scrapped 500 and 1000 rupee notes earlier this month to crack down on black money.
Top government officials say special efforts are being made to pump in additional cash into banks to meet the heavy demand for currency notes on account of salary withdrawal.
The Reserve Bank has been asked to ensure adequate supply of new Rs 500 notes at banks and currency printing presses are working overtime to print them, the official said, adding that there is a lag of 21 days for printed notes to reach markets.
Bankers fear heavy rush at the branches for a week as many ATMs are still not functional. Banks may have to lower the withdrawal limit as there is limited cash coming from RBI, said an official from UCO Bank.
People are likely to throng at bank branches on December 1 as central and state governments credit salaries and pensions to millions of accounts. At the central level alone, there are around 50 lakh employees and 58 lakh pensioners. Bankers said the government’s move last week to provide Rs 10,000 in advance to non-gazetted staff may provide only a slight relief.
Many banks have made ‘SOS calls’ to the Reserve Bank for additional cash for the first few days of December to meet the initial rush of people, already fatigued standing in unending queues to exchange/deposit old notes and make limited withdrawals over the past three weeks after the demonetisation was announced on November 8.
Banks have to make additional arrangement including security deployment, said a senior banker of Canara Bank. Many banks are contemplating to set up additional counters for withdrawal to meet the rush.
“At SBI we have enough currency supply. At some pockets there was shortage, but there also funds are being made available,” State Bank of India’s deputy managing director Manju Agarwal said.
Despite recalibration of nearly 70 per cent of ATMs do not have cash, while people are struggling with the problem of change as the operational ones dispense mostly high denomination Rs 2,000 notes.