Tough cash withdrawal rules cast shadow on weddings
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Mumbai: Her wedding is less than a week away, but the event that is typically a matter of celebration is a tense affair for this bride-to-be in Mumbai.
After the government withdrew high-value currency notes a fortnight ago triggering a cash crunch across the country, owners of her wedding venue are demanding more money and the beautician she had booked is refusing to provide services if the payment is not made in cash.
“When we had booked the venue for the wedding first, it was a cash arrangement. But now that we want to pay by cheque, the owner is demanding 15% service tax. This is hurting our budget for the wedding,” she said.
The problems might seem insignificant to others, but for a regular middle class family like her’s, it is a major roadblock. “Caterers, decorators and travel services have all been creating some level of disruption,” she said.
Thanks to the largely cash-driven businesses that cater to weddings in India, couples looking to get married this season are facing serious problems.
Most of the businesses are now demanding cash payments in new currency notes or are charging a premium for cashless transactions.
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Though the government and the Reserve Bank of India (RBI) have allowed families to withdraw up to Rs2.5 lakh from their savings account to cover for any cash needs for a wedding, the riders attached to this concession are too stringent.
Firstly, the RBI norms state that the person withdrawing the money be either one of the two people getting married or at least their parents. Secondly, the person needs to provide a declaration stating that nobody else from either the bride’s or the groom’s family will withdraw any more money for this wedding. Thirdly, the withdrawal form needs to also contain receipts of any advance payments made to the service providers demanding cash and an affidavit from them stating that they do not have a bank account.
The timing of the announcement is also a hurdle.
Shaktikanta Das, economic affairs secretary, had announced the Rs2.5 lakh withdrawal limit for weddings on 18 November, without giving any details about the process of withdrawal. The central bank’s notification around the specifics of the norms came out only late on 21 November. In the interim, branch managers did not allow any major cash withdrawals.
On 21 November, the Mumbai woman quoted earlier went to a large public sector bank where she holds an account. The branch manager asked her to bring a copy of the wedding invite and identity proof the following day, but when she reached the bank the next day with these documents, the branch official said there weren't enough currency notes.
Branch managers of various banks admit to the difficulties.
According to the manager of a Dhanlaxmi Bank branch at Prabhadevi, Mumbai, the bank’s headquarters sent an internal circular for wedding withdrawals only on Wednesday morning, which meant that the branch couldn’t allow any cash withdrawals till that point in time.
The Mumbai-based branch manager at a large private sector bank pointed out that even if the account holders come with all requisite documents, it is unlikely that they would be able to keep track of who is withdrawing cash and who is being paid.
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“There is no way in the system where one can cross-verify that a person has a bank account or not. Aadhaar seeding is one way to determine where one has an account but not all accounts are seeded,” the branch manager said, seeking anonymity as he is not allowed to be quoted in the press.
Aadhaar seeding is a process where bank accounts are linked with Jan Dhan accounts.
However, experts feel that these are rather small issues when compared to the result that demonetisation is set to achieve.
“Many of the measures that the central bank is announcing are to ensure that inconvenience to the common man is minimized. The ultimate goal though is that whatever monetary activity is happening, it should flow through proper channels,” said Saswata Guha, director at Fitch Ratings.