For pay day rush, banks cut withdrawal limits, ask companies to give prepaid cards

Banks have also suggested to large companies that they should give prepaid payment cards to their employees in lieu of cash, industry sources said.

Written by George Mathew , Pranav Mukul | Mumbainew Delhi | Published:November 30, 2016 4:57 am
demonetisation, no cash, cash crunch, salary day, pay day rush, withdrawal limit, bank withdrawal limit, prepaid cards, pension, salary, atm withdrawal limit, arun jaitley, indian express news, india news, banking The queue outside a bank in Hyderabad on Tuesday. PTI photo

BANKS ACROSS the country are bracing for the next big test of their liquidity position — meeting month-end demand of lakhs of salaried employees and pensioners. To beat the imminent cash crunch, banks are setting internal daily cash withdrawal limits per account, while the government has asked private companies to make payments to employees digitally.

Banks have also suggested to large companies that they should give prepaid payment cards to their employees in lieu of cash, industry sources said.

“We are making arrangements so that there aren’t any problems in the days to come. There should not be any inconvenience to the salaried class, pensioners or any section of society. We have made arrangements, and will be able to say whether these are adequate or not only on the day when money comes into the accounts of pensioners and salaried people. We’re hopeful that there won’t be any problems,” said a top official of the Bank of Maharashtra.

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“The daily ATM withdrawal limit of Rs 2,500 and weekly cash withdrawal limit of Rs 24,000 from the branches will ease the pressure considerably. But we are keeping our fingers crossed. We’re getting only 35-40 per cent of the total cash requirement from RBI. Many of our ATMs are dry. As many customers have now started using digital mode for various transactions, the pressure has come down a bit,” said an official of a leading private sector bank.

Many branches of a state-owned bank in Gujarat have been receiving one-eighth of the cash that is usually disbursed daily, with restrictions on cash disbursal kicking in over the last week. Some large public sector banks are rationing their cash holdings by releasing less currency to their branches. In Delhi, a branch of another state-owned lender shut shop three to four hours earlier than the stipulated closing time.

“We have fixed daily cash withdrawal limit of Rs 3,000 per account as of now. We don’t have enough cash to meet the demand,” said an executive of the Catholic Syrian Bank in Mumbai. Many of the bank’s branches are yet to get the new Rs 500 notes and people are hesitant to accept Rs 2,000 notes, he said.

The shortage of new notes can be gauged from the latest data published by the RBI. Between November 10 and November 27, people could withdraw Rs 2.16 lakh crore from their bank accounts and ATMs, as against Rs 8.11 lakh crore of deposits of old notes during the same period.

In a bid to relieve pressure on banks, the government, on November 17, allowed its Group C employees, including from PSUs, defence and railways, to draw salaries up to Rs 10,000 in cash in advance.

“The Finance Ministry has suggested to private companies to make salary payments to their employees digitally. It has been suggested that they should make salary payments through debit cards or prepaid cards,” said a ministry official.

Several ministries have also deployed point of sale (POS) machines within the office premises to dispense cash for staffers, in a bid to take some pressure off the banking system. The RBI has also doubled the limit on balance that can be kept in prepaid wallets and cards to Rs 20,000 till December 30 to ease the situation.