For most Indians, the salary day this month is going to be unlike any other. The reason being the unabated cash crunch due to the demonetisation of Rs 500 and Rs 1,000 notes announced on 8 November.
After the demonetisation, which ceased the legal tender status of the notes and also introduced new Rs 2,000 and Rs 500 notes, there has been severe shortage of smaller denomination notes that has resulted in long queues at banks and ATMs. Banks and the RBI have also rationed the cash supply in order to meet the demand. Customers can withdraw only Rs 24,000 a week from a bank and Rs 2,500 from an ATM. However, there are further restrictions to banks are not possessing enough cash. For instance, as there are no Rs 500 notes available yet, you can withdraw only Rs 2000 from an ATM. Also it is difficult to get change for Rs 2,000 note.
With the salary withdrawal, which is a regular occurrence at the beginning of every month, expected to start any time now, there are concerns that the situation is going to worsen. So how do you deal with a month on a tight leash unable to access your own money freely?
First things first. This is a month where you won't find it easy making payments or getting people to accept online payments. So factor that difficulty in. But this would only be a beginner's problem. A month later, things should be better. Or so is the expectation.
Anil Rego, CEO & Founder, Right Horizons; and Pankaj Mathpal, Managing Director, Optima Money Manager Pvt Ltd suggest ways to deal with cash crunch better:
Here we go:
Making cashless transactions: Use a combination of mobile wallets, debit and credit cards to make your life easier. Conserve cash as much as possible. That means prune your expenses. Go eating out much less and entertaining folks even lesser. Everyone will understand. Cash crunch is universal in the country. Use cards and mobile wallets wherever possible. If you are able to do that more, most of your expenses will come down considerably. And also your stress levels.
Pay groceries by card: If your kiranawallah does not accept card payments, too bad for him. Go to the supermarket or any other store that does. Your local grocer will realise that there if he or she doesn't go cashless it will result in huge business loss. Next month, if not now, he will be prepared for cashless transactions.
Help your household help: You could help your household help by buying provisions, etc so that she can tide over the month without cash. Most of them have bank accounts which is rarely used and you can help them by showing them how to access cash by using card for payments. Pay by cheque or electronic transfer in the account of your domestic help. If your household help does not have a bank account, assist her in opening a zero-balance account under Jan Dhan Yojana. That will be a permanent solution.
Bank transactions prove the credit worthiness of a person and it will help the domestic helps in raising loan, if they need anytime in future. If you tell this to them they will accept cheque payment easily. Most of the domestic helps use smart phone nowadays. Educate them on the benefits of e-wallet and help them to download the app on their mobile. You can easily transfer money into the e-wallets. You can also pay through Unified Payment Interface (UPI) in the account of your domestic help. There is no registration needed. You can use UPI for utility bills too.
Sign up for ECS facility: Sign up for electronic clearing system and it will deduct the bill amounts directly from your account. You could pay your telephone bills through ECS. You need to give an authorisation to automatically debit the bills. Newspaper hawkers shouldn't be a problem either as they accept payment through cheque or electronic transfer in their accounts as they further pay to the newspaper agency. Every newspaper hawker is expected to have a bank account. If they don't accept cheques, that means their intention is to evade tax on their income.
Use mobile wallets for travel expenses: Use Paytm or any mobile wallet while using autorickshaws. Most of them accept it now. Using taxi aggregators like Ola and Uber should not be an issue. They accept online transactions. You could also download their apps to make payments easier.
Do not go to bank (unless it is absolutely necessary): You could try and avoid going to the bank as much as possible to withdraw cash. If you can do digital transfers, do that sit tight. Let those who is dire need of cash go to the bank. This will reduce the crowd at the banks and ATMs and make their life easier.
You can easily tide over a month with as little as Rs 26,000 as cash in hand if you use online modes of payments as mentioned above. You will have to pay for that cup of tea or coffee if it is a small outlet that does not accept online mode of payment. More importantly, going cashless will leave a digital trail of your expenses and you can keep a tab on your monthly budget and splurge or prune accordingly your wants and needs.