It won't be an exaggeration to say that the chaos outside bank line and ATMs is about to get worse – a lot worse.
As payday approaches on December 1, thousands -- if not millions—are expected to rush to banks and ATMs either to pay staff or to withdraw their own salaries, which is likely to be a huge logistical nightmare as India remains cash strapped three weeks after the government withdrew 86 per cent of the cash in the economy.
While a lot of salaries directly go to bank accounts, many still have a portion of their salaries paid in cash. And most everyday necessities are bought at small merchants that still transact in cash. India only had about 11.9 lakh card swiping machines or POS terminals to support its population of 1.3 billion as of August, data from RBI shows.
Banks and ATMs are still running 40 per cent short on cash, with many banks reportedly declining the full withdrawal of ₹24,000 as they run against a shortage of cash because currency has been slow to arrive.
"This payday will turn into pain-day as banks will not be able to meet the demand simply because the system does not have enough cash. This will restrict people in withdrawing their salaries and even pensions," CH Venkatachalam, general secretary, All India Bank Employees' Association, told Hindustan Times.
Reserve Bank currency printing presses have been running behind schedule and are only expected to start printing the new ₹500 notes from today, Mint's Gopika Gopakumar reports. So far, the presses have only printed ₹2,000 notes, which have been notoriously hard to transact in given the shortage of change in lower denominated notes. According to Mint, two RBI presses printed nearly 2 billion pieces of ₹2,000 notes against an order to print 3.5 billion pieces of these notes. They have also printed some lower denomination notes.
Indian banks have received deposits or exchanged currency worth ₹8.45 lakh crores since the government's surprise announcement withdrawing ₹1,000 and ₹500 notes on November 8, according to data from The Reserve Bank of India. But people have withdrawn only about ₹2.16 lakh crore from their accounts over-the-counter or via ATMs, during this period. India had abruptly invalidated about 14.18 lakh crores worth of currency in circulation.
Banks will need to boost security arrangements with some banks mulling additional counters for withdrawal to meet the rush, HT reported.
The government maintains that sufficient cash is available and has ruled out the need to need to extend the December 30 deadline for depositing demonetised notes.