Telangana back to ‘Less’ economy

HYDERABAD:  IT was like time travel -- back to November 8, 2016 and harrowing months that followed -- for lakhs of people across State trying to withdraw their hard earned money. For, ATMs across the State have gone dry, literally, leaving people struggling for cash. This despite the Reserve Bank of India sending almost double the amount to Telangana compared to what was withdrawn post-demonetisation.

According to finance department officials, around Rs 70,000 crore worth currency was withdrawn post-demonetisation from Telangana. Since then, the central bank has sent Rs 1.4 lakh crore worth currency to the State in several installments. At this juncture, the State government has requested for another `6,000 crore to meet the needs of Rythu Bandhu scheme. Though the government got a positive response, the money is yet to arrive.

Explaining the current currency crunch, State finance department officials expressed concern that amounts withdrawn from banks are returning to the system in the form of receipts. For every Rs 100 withdrawn from banks, 60 per cent normally returns in the form of receipts. But now, it has reduced to 20 per cent in the State.

Experts say this is primarily is because of fears circulating around about the Financial Resolution and Deposit Insurance (FRDI) bill. Fearing their money is not safe, many people are ending their fixed deposits with banks, withdrawing huge sums and saving the same at homes, they alleged. Bankers have claimed to finance department officials that this was the reason for low circulation of currency in State.

The result -- majority of ATMs in the State are running dry. This is common across ATMs located at all commercial and major residential areas. The only respite being ATMs located in remote areas where some cash is available. That too, people say, is restricted to a few hours after banks deposit cash in the machines.

At HDFC branch in Kukatpally, the ATM functions only in the evening - courtesy, the refilling of emptied dispensing machines. "There are hardly any visitors in the day, but in the evening there's a huge line of customers as refilling of cash happens only then," said sources. The ATM is filled with currency worth `15 lakh every evening and it becomes empty by morning, they added.

Interestingly, few ATMs dispensing cash do not have lower denominations like `100, `200, or `500 but only `2,000. The situation is similar in other major cities of the State. Warangal and Karimnagar people are struggling to get cash for their day-to-day expenses. Most ATMs in Warangal city and surrounding areas adorn the 'No cash' boards. Those dispensing cash witness large queues.

"I have been roaming around to draw cash for the last two hours, but could not find a single functional ATM," says private employee V Rajender Rao. Ironically, there's more cash in the system currently compared to what was there before demonetisation was carried out, according to the RBI data. However, it remains elusive for the common man.

KTR responds to Jaitley on Twitter

Responding to Finance Minister's tweet on cash situation, Telangana IT minister KT Rama Rao retweeted: Sir, with due respect the cash shortage in Banks & ATMs is neither sudden nor temporary. I’ve been hearing complaints for over 3 months repeatedly in Hyderabad. Pls have RBI & Fin Min team dig deeper & not brush away an issue that is eroding people’s confidence in banking system

What's the concern over FRDI Bill?

The Financial Resolution and Deposit Insurance (FRDI) Bill, 2017 was introduced in the Lok Sabha in August last year. The FRDI Bill is being examined by a joint Parliamentary committee. It has a bail-in clause which proposes to use depositors’ money to bail out their bank or financial institution if it fails, according to reports. Some experts say that the bill has a ‘bail-in’ clause which brings potential harm to deposits in the form of savings accounts, according to reports. However, Finance Minister Arun Jaitley had assured the Lok Sabha that money of all depositors in public sector banks will be protected and there is no need to create any fear psychosis