NEW DELHI/MUMBAI/CHENNAI: With the cash crunch at bank branches expected to persist on Thursday, the government has moved to further scale up the printing of Rs 500 notes, hoping that the new stock of the elusive currency will ease the situation in the next few days. Banks across the country continued to face cash shortages and most of them ran out of money+ early in the morning on Wednesday.
Private banks had a tough time dealing with cash shortage and industry data showed the supply was sharply reduced. Sources said the four currency printing presses, two owned by RBI at Mysuru and Salboni, and two government-owned ones at Nashik and Devas, which were operating two shifts, have now started working three shifts. The focus now is on augmenting the supply of Rs 500 notes, the sources said.
Sources acknowledged that cash remained scarce on Wednesday leading to return of long queues and dry ATMs, but said the problem will go. The effort over the last couple of days had been to stock the state-run banks with cash where government employees have accounts and salary is paid on the 1st or 2nd of the month. Besides, there is a huge number of private companies with accounts with state-run banks.
“Supply to other banks will definitely improve. We are air-lifting 500-rupee notes. There will be some pressure initially but in the next few days it will ease,” said a government source. With the RBI increasing supply of cash to nearly four times of what banks have been receiving in the last week, the position in bank branches and ATMs of large lenders is expected to improve substantially on Thursday. Banks will be using the money to make available funds in centres where they have large number of salary accounts.
Private banks have been making arrangements to distribute funds in companies which have a salary account with them through mobile devices. “For several years now, bulk of salary withdrawals are happening through ATMs. To take care of salary demand, we have filled our ATMs with Rs 2,000 notes,” said an official with a public sector bank.
Many bank branches wore a deserted look on Wednesday as they ran out of cash. Branches of smaller banks did not receive any cash while larger banks with currency chests got a fourth of their requirement. In Mumbai, several branches were functioning with half shutters down to send a message that they were out of cash.
“More than 90% of those visiting branches are for cash withdrawal. Almost all personal loan activity has come to a standstill,” said a private bank official. A leading private bank received only Rs 5 crore for Delhi on Tuesday out of its requirement of about Rs 125 crore. The situation was similar for other banks as cash shortage persisted. But by Wednesday evening, fresh supplies arrived but not enough to service those who had thronged the branches.
Sources said there were reports that cash at private banks was being rationed to “service their big clients”. At least two private sector banks are under the scanner, with finance ministry sources saying that one of them is clearly in the breach. This also worsened the cash shortage.
Banks moved to ease the shortage with HDFC Bank signing a deal with Federation of Retail Traders’ Welfare Association to provide cash at point of sale machines to cardholders. Following this, some marquee outlets will be allowing customers to swipe cards for cash.
“We have deployed PoS machines at the stores to help customers withdraw cash using their debit cards. This initiative will help the masses easily withdraw cash and reduce inconvenience,” said Parag Rao, head, card payment products, merchant acquiring services and marketing, HDFC Bank.