Payday test: Banks brace for salary payments amid cash crunch
Mumbai: As salaries get credited in bank accounts across India, banks are beginning to witness another bout of long queues outside their branches.
Salaried customers who need cash to pay households helps and need cash for any urgent requirements will be waiting outside bank branches to withdraw up to Rs24,000 during the week.
Bankers have already sounded off branches and asked them to beef up their preparations in order to meet with the higher demand from their customers and are closely watching how the next two days play out.
“We have told our branches to be prepared for long hours during these two days at least as salaries start coming in. We are also asking customers to try and be more judicious in their use of cash and opt for electronic modes of transfer,” said Shyam Srinivasan, managing director and chief executive officer at Federal Bank.
According to Srinivasan, the bank has already seen a doubling in the volume of mobile based banking transactions, even though the ticket size per transaction is lower. About 70% of Federal Bank’s customer base is in semi-urban and rural areas, so the increase in mobile transactions is a very positive sign, Srinivasan added.
Bankers feel that while crowd management is not their biggest worry, as exchanging old currency has now stopped at bank branches, the staff can focus on withdrawals. However, the real concern for most is that there are too many variables as far as quantum of withdrawals is concerned.
“We are not very worried about the number of people standing outside branches. That is manageable. However, there might be higher withdrawals due to the Rs50,000 weekly limit that is available for current account holders,” said the retail head of a mid-sized private sector bank, speaking on conditions of anonymity.
According to this banker, the other variables playing against banks include the low availability of the new Rs2,000 and Rs500 notes and salaried customers withdrawing up to the maximum limit.
“If everyone starts withdrawing their entire limit, it might put pressure on how branches function,” he added.
The signs of pain are already visible. On Wednesday, most bank branches in Fort, Mumbai have delayed opening by an hour and a half, since cash vans usually come around that time. As time passes customers are getting more anxious and have been yelling at the branch staff to move faster.
The HDFC Bank branch in Fort has been allowing daily withdrawal limit of Rs6,000 per customer, as cash available in accounts is low. According to 42-year-old Shilpesh Vora, who has an account there, branch officials made a mark on his cheque to note that he had already withdrawn Rs6,000 from the Rs24,000 weekly limit.
“I have to give salary to my employees every week, since they don’t have bank account I am standing queue,” Vora said, adding that he had to wait in queue for four hours on Tuesday for this. On Wednesday, he was standing in queue at an ICICI Bank branch in Fort, to withdraw some more cash from his second bank account.
Branches are also expected to be preferred by customers who are not content with the Rs2,500 daily withdrawal limit at automated teller machines (ATMs).
According to Iftakar Alam, 50, a Bank of India account holder waiting at the bank’s Fort branch, withdrawing from branches makes sense since ATMs are largely running dry or have long lines outside them and branches have higher limits.