Demonetisation: Customers in spot as banks say no to deposits above Rs 5,000 despite finmin directive

Finance minister Arun Jaitley’s clarification on Monday late night that banks will take more than Rs 5,000 deposits from customers without questioning if the amount is deposited in one go seems to have fallen flat as bankers are refusing to take such deposits without a written declaration, say various news reports. According to a report in The Times of India, bankers are following the Reserve Bank of India’s notification issued on Monday in letter and spirit which has given rise to the difficult situation. [caption id=“attachment_3166534” align=“alignleft” width=“380”]  Representational image. Reuters[/caption] The RBI and the finance ministry on Monday morning put out notifications saying customers will be allowed to deposit old Rs 500 and Rs 1,000 notes worth more than Rs 5,000 only once before 30 December. Even then, they will have to satisfactorily explain to two bank officials why the deposits were not done earlier. “Tenders of SBNs (specified bank notes) in excess of Rs 5,000 into a bank account will be received for credit only once during the remaining period till December 30, 2016. The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in CBS to that effect so that no more tenders are allowed,” said the RBI’s notification. The move, according to the ministry, was aimed at reducing the queues in front of the banks. However, two other unsaid reasons could be fear of money laundering through unsuspecting poor customers and also curbing the accrual of deposits at the banks which have already gone beyond expectations. However, the directive came under criticism as customers felt the government has deviated from its promise made by Prime Minister Narendra Modi on 8 November that nobody needs to rush to the banks to deposit their cash as there is time until 30 December. After the backlash, the finance minister late night on Monday clarified that customers will be allowed to deposit any amount of old notes if it is done in one go. The clarification just compounded the confusion as it completely contradicted the RBI’s early morning notification. It is to be noted that there has not been any notification yet on the clarification, which essentially remains a verbal communication to the media from Jaitley. The bank staff are at the receiving end of the repeated policy flip-flops. A top bank official has told The Times of India that a memo based on the RBI notification has already been sent to the staff. That is the reason they are not ready to accept the deposit without questioning by two officials. The new notification - 59th after demonetisation was announced on 8 November, according to The Indian Express - is likely to further worsen the relationship between the bank staff and customers. While front office staff are bound to follow the orders received from the RBI, customers on the other hand are going by the finance minister’s notification, prompting an increase in abuses on the banking staff. What has compounded the situation is the clause that customers have to explain the reason for the delayed deposit to the satisfaction of the questioning bank officials. ‘Satisfaction’ is a subjective term, some of them pointed out to the ToI. What is satisfactory for customer may not be so for the officials. There can be difference between the two officials too. As author and columnist Vivek Kaul says in his Facebook post, bank staff or officers can’t be blamed. They are neither experts in questioning nor in finding the source of funds.

The bank unions have many times earlier brought to the attention of the authorities the problems faced by the staff. In a letter to the finance minister and the RBI, they had said the central bank’s repeated reiteration that it is dispensing enough cash to the banks is aggravating the situation at the bank branches as customers feel the staff is hoarding the cash to serve the rich and wealthy and that the poor customers are being shortchanged. Clearly, the new notification is only adding to pain of the customers and banks.\