Queues returned to banks and ATMs on Wednesday as people rushed to withdraw cash after monthly salaries got credited in their bank accounts -- the first since the high value currency was scrapped -- signalling more pain as the crowd is likely to get bigger from today (1 December).
A PTI report said queues at most of the ATMs and banks across the city on Wednesday were shorter than expected though there were complaints that cash dispensing machines were either dry or shut and customers could not draw the maximum permissible amount -- Rs 2,500 from ATMs and Rs 24,000 from banks.
Most private companies in India credit salaries to their employees on the last day of the 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 utilitiy helps -- domestic helps, drivers and clear monthly grocery, milk, newspaper and other bills.
Since the supply of notes from currency chests has failed to keep pace with the demand for cash after 86 percent of currency in circulation was declared illegal on 8 November, the chaos worsened on payday as more households need cash on hand than earlier with lack of currency notes or limited notes in their possession.
People were seen in bigger numbers on Thursday waiting to withdraw money. Many were annoyed by the rush and the arbitrary withdrawal limits set by banks. And the situation could get worse in the coming days as more number of people will receive salaries.
What are the customers saying?
"I have to pay my maid and grocery bills in cash. I somehow managed to convince my landlord to accept the rent in cheque but I am bound to visit the bank for other payments," said Vishakha Sharma from west Delhi.
The 27-year-old waited outside her bank branch for two hours. "It is so humiliating that we have to stand in long queues and beg for our own money."
An MNC employee, Yogesh Yadav, said he had come to withdraw Rs 24,000 from his bank account but was given only Rs 10,000. "It's the end of the month and I am supposed to pay bills. How will I manage?" Yadav asked.
A resident of Krishna Nagar in Delhi, Rahul Chauhan got his salary credited on Tuesday but could not withdraw it even after standing in a queue at 3 a.m. on Wednesday.
"By the time my chance to enter the bank came, it ran out of cash."
The case was no different in other parts of the country.
In Kolkata, in apprehension of a mad rush, people started queuing up outside banks and ATMs since morning.
"I am in the queue since 8.30 a.m.," said Sougata Mitra, an employee of a private firm outside a Bank of India branch in central Kolkata.
It was 10.45 a.m. when IANS caught up with Mitra, and already 50-60 customers had lined up.
The first salary day after demonetization proved haranguing for the maximum city Mumbai where most ATMs ran dry. Desperate men and women drove from one place to another, halting wherever they saw an ATM alive, albeit with long queues.
Though many Mumbaikars have shifted to making certain payments online or by debit/credit cards, there are many bills which need to be paid in cash. Many feared that the situation could worsen on Thursday.
"Everything has come to a standstill. Worse, many online payments systems are jammed due to the sudden heavy traffic and payments are pending," fumed a pharmaceutical consultant P. Venkataraman from Kandivali, a Mumbai suburb.
"I managed to get only Rs 4,000 this morning against the withdrawl limit of Rs 24,000 as I was told that there was hardly any cash supply to the banks in the last few days. I will have to wait and try my luck later in the day," a South Mumbai resident has been quoted in a PTI report.
What are the banks saying?
Several banks ran out of cash within hours of opening on Wednesday. Some bank officials complained that they were getting cash much below what they need.
Various media reports put the cash situation at banks at about one-fifth of the demand. A report in The Times of India cited a bank official as saying that his branch received 15-20 percent of the required amount. Due to this, bankers were rationing withdrawals so that more customers could be catered to.
“RBI is currently supplying cash based on a variety of calculations including how much a bank branch got the previous day. That will continue. We will continue to ration cash,” one banker has been quoted as saying in a report in The Economic Times.
However, bankers are not ready to be quoted and remain unnamed in the reports, probably fearing they would have to face the brunt of the government's wrath. Those who were named said the situation is all fine.
When asked about the cash crunch situation, Central Bank Executive Director R C Lodha told PTI, "We have made adequate arrangements to meet the higher demand for cash as salaries would be credited into customers account (as the month turns). In our bank there would be no shortage of cash."
“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 has also been quoted as saying in another PTI report.
It must be noted that Indian Banks' Association, the body of the bank management, has not come out with any statement regarding demonetisation yet.
However, unnamed bank managers are painting a grim picture of the situation. They say the bank branches are not getting enough Rs 500 and Rs 100 notes to cater to their customers. Since these smaller denominations are in short supply, Rs 2,000 notes that are available now are being given to customers -- a denomination that is not in demand since customers find it difficult get change for the Rs 2000 note.
A PTI report said though nearly 70 percent of ATMs are now recalibrated, they do not have cash. People are struggling with the problem of getting change as the operational ones dispense mostly high denomination Rs 2,000 notes.
The rationing and short supply of smaller denomination notes are adding to the distress of the customers who are waiting in queues for a long time.
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.
According to reports, banks have resorted to seeking more security deployment at branches to manage the angry crowd.
Many banks are contemplating to set up additional counters for withdrawals to meet the rush.
What is the RBI and government saying?
Reports say that both the government and the RBI are taking steps to improve the situation. A report in The Times of India citing sources said the four printing presses that produce currency notes are now working in three shifts against the earlier two shifts. The aim to is increase the supply of Rs 500 and Rs 100 notes.
It further says citing sources that the RBI has increased the cash supply to banks by four times and the situation will be better today (Thursday).
However, there has not been any official update on the evolving situation from either the RBI or the finance ministry in the last two-three days.
Given the lack of information from authorities, customers are likely to hoard cash anticipating further tightening of rules. And if they do, it will just put further pressure on the cash situation. The blame squarely rests on the government and the RBI.
What lies ahead?
As of now, expect more uncertainty and chaos. Even if the government and the RBI have put pressure to produce more Rs 500 and Rs 1,000 notes, this is unlikely to ease the crunch easily. A government official has told PTI that that there is a lag of 21 days for printed notes to reach markets.
The PTI report notes that 1 December, today, is the pay day and banks are gearing up to face a huge rush as people. The queues at branches across the country are likely to get lengthier.
What has made matters worse is the fact that a large number of ATMs are still dry even 23 days after the government scrapped Rs 500 and Rs 1,000 notes.
And with pay day just dawning, it seems to be the beginning of the pain.
With IANS and PTI