Long bank weekend set to worsen cash crunch

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NEW DELHI/ LUCKNOW/MUMBAI: Thecash crunch in many cities, including the national capital, showed no sign of easing on Friday, and with banks closed for the next three days, expect the pain to persist till Tuesday when they reopen for business. Banks are shut on Monday for Eid-e-Milad.

A majority of banks in the capital continued to grapple with cash shortages and restless customers. “For the past three days, the supply has been uneven. We run out of cash in the initial hours after opening,” said a branch manager at a private bank. The scene was the same across the country.

A leading private bank in Delhi received Rs 24 crore against its daily normal requirement of Rs 125 crore. A large chunk of ATMs in the capital remained idle due to lack of cash while some only had Rs 2,000 notes. Long lines reappeared in front of some bank branches. The frustration of those queued up was apparent considering the weekend is when people have time for outings.

State-run banks fared better as they got a larger share. Bankers said the shortage of Rs 500 notes continued despite the government and Reserve Bank of India‘s (RBI) assurance that the supply of new notes had been stepped up.

According to an official with a private bank, the situation in Mumbai has improved in the last few days. Compared to an average of Rs 25 crore, the flow of currency was Rs 60 crore. On Friday, large private banks in Mumbai got around Rs 60 crore while it was Rs 25 crore in Delhi. “We hope by next week, with increased supply of Rs 500 notes, we would get Rs 80 crore a day. This will ease the pressure,” said another private banker.

In Uttar Pradesh, queues before bank branches and ATMs refused to shrink.Bankers complained that they were not getting adequate supply of currency from RBI. Most ATMs across the state are dry while banks have imposed different withdrawal limits -from Rs 5,000 to Rs 10,000 instead of the Rs 24,000 set by RBI. And with three consecutive bank holidays lined up from Saturday , people across UP are bracing for a “dry” weekend.
Most leading banks in Lucknow said that while the daily footfall for cash withdrawal in the first week of December increased three times, cash supply from RBI declined by almost 40%. In Lucknow, around 85% of ATMs remained dry for a significant period of time, say bankers.

A government bank’s cash officer said, “Prior to demonetisation, our daily cash requirement was Rs 40-50 lakh but after November 9, daily demand rose to almost Rs 1.5 crore as people have now started hoarding cash for emergencies. On the other hand, RBI is providing only 40% of our daily requirement.” Banks are managing withdrawals from the valid currency deposited by customers.