The Costs of Demonetisation: Bank Unions Plan Strike, Relief Efforts in Chennai Suffer

A daily round-up on the human impact of demonetisation.

People queuing to withdraw money. Credit: PTI

People queuing to withdraw money. Credit: PTI

Increasing violence against bank employees

Bank employees are feeling increasingly targeted in the face of public anger. In a report in the Hindu, the public in Western UP has been simmering with anger due to the cash crunch. Keshav Karothia, a branch manager at a Punjab National Bank branch in Bulandshahr, was forced to sit on the Gulaoti-Sikandrabad road after being thrashed by locals, the report said. This was almost a month after a senior official of the same branch had been thrashed, leading to severe mental trauma. Karothia clarified that the daily supply of cash to the bank was Rs 6-8 lakh, while the demand was at Rs 50 lakh. Ranjeet Singh, another banker from Bulandshahr, noted that these attacks have become a norm now, leading to a worrying time for both bank employees and their families.

Bank unions plan strike

According to a report in the Hindu, the All India Bank Employees Association and the All India Bank Officers Association, the two major banking unions, have called for demonstrations against the government. The constant notifications and the lack of cash provided has led banking establishments facing the wrath of clients. The mistreatment of bank employees is the reason behind the two major unions calling for demonstrations on December 28, just two days before Narendra Modi’s 50-day limit on demonetisation is set to end. The banks have demanded increased transparency in the cash flow and called on the RBI to ensure the protection of bank employees.

Sixty changes in 43 days

Finance minister Arun Jaitley had said four days after the announcement of demonetisation that people need not worry and can deposit old notes any time before December 30. However, more than a month later, on December 19, a Reserve Bank of India-Finance Ministry notification said, “Tenders of SBNs (specified bank notes) in excess of Rs 5,000 into a bank account will be received for credit only once during the remaining period till December 30, 2016. The credit in such cases shall be afforded only after questioning tenderer, on record, in the presence of at least two officials of the bank, as to why this could not be deposited earlier and receiving a satisfactory explanation. The explanation should be kept on record to facilitate an audit trail at a later stage. An appropriate flag also should be raised in CBS to that effect so that no more tenders are allowed.”

The change was the 59th notification since demonetisation on November 8. The banks have been at the receiving end of much of the troubles, leading to a deterioration in bank-customer relationships, with increased reports of violence against banks and bank employees as public frustrations grow.

The evening of the notification, finance minister Arun Jaitley clarified that notes beyond Rs 5,000 can be deposited without question in one go. According to a Firstpost report, however, banks have taken the letter by the word and are requesting a ‘written declaration’ from customers that they can submit the amount without question, as they become cautious with every step.

The RBI on Wednesday issued a notification to say that the 59th notification would not hold for those with KYC-compliant accounts, adding another change to the range of notifications issued.

Relief efforts in Chennai suffer

The Hindu reported that the cash crunch has severely affected the relief efforts after Cyclone Vardah in Chennai. The cyclone hit last week, damaging infrastructure and disrupting lives. Cash flow from the treasury was not affected until Tuesday, when the treasury of the Greater Chennai Corporation (GCC) halted operations due to the lack of cash. Officials in many areas were even unable to give Rs 100 as daily contingency to the workers who had been employed. The GCC holds accounts in ten different banks, but due to the lack of cash, alternatives like cheques were looked into. However, in areas where relief work has anyway been difficult, the prospect for payments by cheque seems bleak.

Students in distress

In the education hub of Coimbatore, demonetisation seems to have hit the normal life of students. Students used to survive through daily withdrawals from ATMs, but are now struggling to meet their expenses. They are lagging behind on rent and in some cases aren’t even able to buy goods for daily use as nearby shops don’t accept electronic transactions. The dilemma for them has been standing in ATM queues or studying for their semester exams. In many cases, students have been left with nowhere to go as they are forced to vacate hostels a day after their exams, the Hindu reported.

Not so digital

As the government tries to push through digital transactions, businessmen in several places have adapted to digital systems in order to resurrect their businesses. A Times of India report looked into a few such cases. Krishna Sharma, a shopkeeper selling dairy products in New Seelampur, attempted to employ online wallets like PayTm and MobiKwik. However, there has been a reluctance to use these payment methods because of the lack of access for many customers.

In Mukherjee Nagar, Delhi, shopkeeper Vikrant Chhabra employed the Immediate Payment Service (IMPS) to let people pay through bank apps. But, he says that he is reluctant to use IMPS with people he doesn’t trust and therefore several transactions are still in cash. Masood Rahman, who works in the same area, said the machines don’t work because of a poor internet connection. Even though the nearby ATMs are stocked with notes, the servers have been down.

Single-screen theatres take a hit

Single-screen theatres are being overlooked by the movie industry. Production houses are looking for avenues to distribute their movies, but are wary of approaching these theatres. Demonetisation has drastically reduced the amount of people who visit cinema halls and producers are constantly on the edge to keep their losses at a minimum. These theatres are often more expensive to operate and are not able to meet the costs of running the movie, which reduces the amount movie-makers can gain out of it.

Although they had been losing attendance constantly over the past few years, demonetisation seems to have been the last nail in the coffin for the single-screen theatres, Livemint reported.

Tourism industry faces loss

It hasn’t been a good season for the tourism industry. As families cut on expenses, travel plans have become the first casualty in this wave of demonetisation. The Hindu reported on the state of the Karnataka State Tourism Development Corporation (KSTDC). KSTDC managing director Kumar Pushkar said properties across the state had seen a drop in occupancy by 30-35%, and also reported that its prime properties in Hampi and Kodagu are only booked upto 40%. Coupled with the Cauvery issue, it hasn’t been a good few months for them.

Even the luxury train, the ‘golden-chariot’ has seen a drop in bookings. Officials are looking to shorten the span in which the train runs, in an attempt to minimise losses. Restaurant and pubs in Bangalore have seen a rise in electronic transactions but have lost out on cash transactions, leading to an overall reduction in sales.

The two-wheeler industry takes a dip

Big businesses are also bearing the brunt of demonetisation. As reported by Business Standardthe two-wheeler industry took a hit for the first time this year. The scooter segment, which has been supported by a rising middle class, grew by 23% from April-October but declined by 2% in November. Honda Motorcyle and Scooter India had set up plants earlier this year expecting a boom in sales, but growth in the industry has been dented by demonetisation.