A closed ATM in Vadodara on Tuesday. (Bhupendra Rana)
The shortage of cash, which has been plaguing Gujarat for over a week, worsened on Tuesday with several ATMs running dry across the state and several banks putting a cap on withdrawal limit. In a repeat of the post-demonetisation days of November 2016, long queues of people were seen outside banks and ATMs. Deputy Chief Minister Nitin Patel, who holds the finance portfolio, acknowledged that banks are facing cash crunch, and said that the government was in touch with the Reserve Bank of India (RBI) to ensure that enough cash is supplied to banks. Bank officials, however, said they are getting only one-tenth of the required cash leaving them helpless to replenish the ATMs.
While admitting to cash crunch, banks in Vadodara said that the situation should not be viewed as a “crisis” as the shortage of cash supply was a step to ensure that the cash reserves do not deplete. “There has been a shortage in the cash reserves received by banks across the state since the second week of April. In order to ensure that banks do not run out of money or deny withdrawals to customers, we have been asked to check ATM refills for now. It is just a passing phase as the state government and the RBI has already started ironing out the issue. In the next few days, the cash should be back in ATMs, too,” an official of a nationalised bank in Vadodara said.
According to Gujarat Urban Cooperative Banks’ Federation (GUCBF), the apex body of 244 urban cooperative banks in the state, many banks, especially in rural areas, are not allowing large cash withdrawals. “We had met the regional director of the RBI in Ahmedabad on Monday. He assured us that the paucity of cash will ease,” said Jyotindra Mehta, chairman of GUCBF.
On Tuesday, banks recorded a spike in withdrawals via self cheques. A regional manager of another bank said, “After demonetisation in 2016, this is perhaps the first instance where customers have queued up at the branches to withdraw money. There is a crunch as we have received only about 25 per cent of our total requirement on a daily basis for the last two weeks. But we are not in panic mode. People who really need money will withdraw from branches. There is no restriction on branch withdrawals yet.”
In Surat, cooperative banks that serve mostly traders also reported shortage of cash. Surat People’s Co-operative Bank chairman Mukesh Gajjar said, “We have been facing a cash problem for last few days. There is a huge queue to withdraw cash from the banks. Today, we received a call from RBI officials, who said that they are ready to send Rs 30 crore to the banks, and also told us to share it with other small banks. But till now we have not received any money.” The co-operative bank has over over 29 branches, 11 ATMs and over 5 lakh account holders.
Varachha Co-operative Bank General Manager Vithal Dhanani said that his bank has been urging its 4.50 lakh account holders to use online payment methods. “But they don’t prefer (the online mode of payment), and are afraid of the safety of their money in their accounts,” he added. In Saurashtra, the hub of agriculture produce markets, farmers were most hit by the shortage of cash.
“For the last one-and-half-month, banks have progressively been reducing the amount of cash being made available to us. The situation has worsened over the last four-five days and some private commercial banks are giving us only Rs 50,000 cash per day against our demand of Rs 7-8 lakh. The daily turnover of Rajkot AMPC is around Rs 15 crore. But the eight banks on the APMC premises are hardly making Rs 2 crore available in cash. Farmers are refusing to accept payment through cheque or electronic transfer since they have to do rounds of local banks for withdrawing their money. The scenario is worsening by the day and we fear return of the post-demonitisation days if the situation does not ease very quickly,” said Atul Kamani, president of Rajkot APMC Commission Agents’ Association, adding that being the harvest and marriage season, the demand for cash is even more in the state.
The situation was same at Halvad APMC, one of the largest wholesale markets of cumin seeds and cotton in Saurashtra region. “Our daily turnover is around Rs 2.5 crore but banks are hardly giving us 15 per cent of that amount in cash. On the other hand, at least 40 per cent of farmers don’t know banking and are therefore hesitant to accept payment through cheque or electronic transfer. Local bank managers don’t have specific answers for the cash shortage. This is surprising as we are almost one-and-half-years past the demonetisation decision,” said Shankar Patel, president of commission agents and traders association of Halvad APMC.
Commission agents in Unjha APMC, the largest market of spice seeds in the state, said they were worst hit. “We are in the midst of peak season of cumin seeds, isabgul, fennel etc, and the daily turnover is Rs 50 crore. However, banks are hardly able to make Rs 2 crore cash available. If the government wants to push cashless transactions, they first improve the banking facilities in rural areas,” said Sitaram Patel, president of Unja APMC’s Vyapari Mandal.
However, commission agents at Gondal APMC said they were better placed, but the cash shortage was pinching them as well. “Since the GST was implemented, we shifted to cheque and electronic transfer mode of payment. But marginal farmers, who bring small quantities of their produce, demand partial payment in cash as they say that they have to purchase inputs for their next crop and items of household consumption. But banks are not giving us more than Rs 2 lakh in cash. Nonetheless, we are better placed as compared to other APMCs,” said Mukesh Satasiya, president of commission agents association of Gondal APMC.
“We have tied up with four commercial banks that have currency chests in Rajkot. As of now, we are managing the situation but we are running short on cash reserve. If the situation deteriorates further, our functioning will be affected,” said C N Tarapara, chief consultant of Rajkot District Cooperative (RDC) Bank. Every week, the bank pays around Rs 12 crore per week to dairy farmers.