Cash crunch hits Telangana hard

Banks in Telangana continue to grapple with cash crunch as the State government gets ready to roll out a one of its kind, ₹4,000 per acre investment support scheme for farmers, every crop season, next month.

The government’s decision to hand out the cheques comes even as thousands of bank customers increasingly find, much to their dismay, that there just isn’t enough cash at the ATMs at all times. It is no different at the counters managed by tellers either, says a regional rural bank head, requesting anonymity, on the cash levels at the bank branches. Deterioration in cash availability began from September last year, State Bank of India (SBI) sources say, about the challenge banks in Telangana as well as neighbouring Andhra Pradesh are facing.

Specific to Telangana, information on cash supplied to currency chests obtained under RTI Act 2005 recently from SBI by ‘Factly’, a data-driven fact finding portal, sheds more light.

Factly founder Rakesh Dubbudu had also sought details from the Reserve Bank of India (RBI) on supplies it made day wise to all currency chests in Telangana for the same time frame – January 2016 to January 2018. The central bank, however, turned down the request citing a provision under the Act.

An analysis of the cash received by eight facilities of SBI — the SCAB (specialised currency administration branch) in Hyderabad and currency chest branches in seven other major districts — shows the monthly average supply has dwindled to ₹629 crore in the five months ended January. During a 10-month period from November 2016 (demonetisation period) to August 2017, the monthly average supply was ₹1,795 crore. This number stood at ₹1,316 crore in January-October 2016 (pre-demonetisation) period.

During the 25 months for which data was provided, the supplies touched a peak of ₹5,377 crore in July last year. At the other end of the spectrum, the supply was nil in September 2016. High value currency dominated the supplies all months, except in November 2017 when all of the ₹544 crore supplied was in low value currency notes. Mr. Dubbudu says these numbers can be extrapolated to get the big picture. According to sources in banking industry, SBI usually gets a 40% share in every cash remittance made by RBI in Telangana. A portion of the cash some of the eight SBI facilities received was also meant for onward distribution to other banks.

“It is because currency supply is limited post demonetisation,” an SBI official sought to attribute the crunch. This in spite of RBI replenishing the currency, withdrawn following the November 8, 2016 demonetisation directive, in terms of value.

Earlier this year, State Finance Minister Eatala Rajender and Agriculture Minister Pocharam Srinivas Reddy had met Union Finance Minister Arun Jaitley and appealed for adequate currency notes to be made available in the banks in view of upcoming scheme for farmers.

So what fate await the cheques? None of them will be dishonoured, a banker assures, hastening to add: “The money will come into their (farmers) accounts.” What he, however, did not explain was how soon can it be withdrawn.