Banks brace for huge rush on salary day

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Come Thursday, the first day of the new month when salaries and pensions of lakhs of people will be credited to their bank accounts, there is likely to be a virtual run on the banks across the State for the cash ration.

And, the banks, already short on currencies, are not prepared to meet the rush for the withdrawals as they have not been assured of cash flows from the Reserve Bank of India. “We expect that we will get some cash from the RBI on Wednesday or Thursday, but how much and of what denominations, we don’t know,” Branch-level managers and employees are worried as the first week of every month sees the largest withdrawals. “Usually, salaried people withdraw more than half of their monthly income within the first week itself to meet end-of-month expenses such as rent,” the official noted.

The State Bank of India, through which the police constables in Kerala get their salaries, usually finds that most of these accounts go dry within the first ten days.
9,100 ATMs

And, these days, the withdrawals are mostly from the ATMs.

There are 9,100 ATMs in Kerala. But bank employees point out that since ATMs can deliver only Rs. 2,000, the customers would first be rushing to the bank branches from where, theoretically, they can withdraw Rs. 24,000. The same customer might also queue up in front of the ATMs as well as the branches.

“The situation is grave,” says K.S. Krishna, general secretary of the SBT Employees Union. “If the RBI does not ship in enough cash on a daily basis over the next few days, we are in for big trouble.” Mr. Krishna said adding that it would be the counter staff at the banks, already overworked, who would be facing the people’s wrath.

Customers’ plight

Since most banks now were able to give only a portion of the promised Rs. 24,000 at one go, the customers were becoming increasingly irritated.

Supposing that each ATM serves 500 customers and each customer gets Rs. 2,000 each, the State Banks Staff Union calculates that Kerala would need around Rs. 9,000 crore in cash a day. As of now, not even one-fifth of this was being disbursed as the currency chests of the banks get only a fraction of the cash required. In the case of banks which do not have their own cash chests, such as Corporation Bank, Bank of Maharashtra and Oriental Bank of Commerce, they have to rely on other banks for cash.