500,000 harassed Indian bank workers may go on strike as cash-crunch returns

Not again.
Not again.
Image: Reuters/Danish Siddiqui
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Bank employees in India are tired of getting the stick for government’s and central bank’s inefficiency.

Harangued and heckled by customers angry over an acute cash-crunch in the economy, some 500,000 of them are set to go on a strike soon.

“We can’t be blamed for the government or the Reserve Bank of India’s (RBI) failure,” CH Venkatachalam, general secretary of the the All India Banks Employees’ Association (AIBEA), told Quartz. “Customers have a right to withdraw their money whenever they want and they also have a right to get upset over it if they are unable to. But there is also no reason why the employees need to suffer for the centre’s failure.”

Founded in 1946, AIBEA is India’s oldest and largest bank employees’ union with around 500,000 members.

Over the past few months, ATMs across the country have inexplicably gone dry. The problem has been especially severe in certain states like Andhra Pradesh, Telangana, Karnataka, Madhya Pradesh, Gujarat, Uttar Pradesh, Bihar, and Manipur. The “no cash” sign boards at these counters have come as a grim reminder of the post-demonetisation situation that unfolded in November 2016.

Venkatachalam has written to the RBI and warned of an agitation if the cash supply doesn’t improve soon. Meanwhile, the government and the baking regulator have stepped in to allay customers concerns, though the AIBEA believes it’s too little, too late. “There were signs that this crisis was coming, but the warning signals were missed,” Venkatachalam said.

While the government is still investigating the reasons for the shortage, the RBI has blamed it on logistical issues. However, experts believe the crux of the problem is the return of cash to the economy post-demonetisation, coupled with the slower-than-expected growth in digital transactions.

“The cash-supply had been kept low deliberately in order to push the agenda of digital banking,” said Venkatachalam. “Unavailability of smaller denomination of notes in the hinterland has also aggravated the issue. If the ATMs and the bank branches only have notes of Rs2,000 then they are unable to service customers who are looking to withdraw smaller sums,” he added.

Meanwhile, the government’s proposal to use depositors’ money to bail out distressed banks has caused panic, even though the bill for this has been shelved. What’s added fuel to the fire is the recent spate of frauds at banks even as their pile of bad loans has grown.

“All this has sparked panic among a section of investors, especially in rural areas, that their money is not safe with banks. People are hoarding cash as the credibility of banks is being questioned,” said Venkatachalam.