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Demonetisation: Will banks be able to pass the first pay-day test?

Today will be the first salary-day after the major announcement of demonetising Rs 500 and Rs 1000 notes.

BT Online | December 1, 2016 | Updated 08:46 IST
Will you get your salary on time?
Will you get your salary on time?

Today will be the first salary-day after the major announcement of demonetising Rs 500 and Rs 1000 notes. The duration of first 10 days can become a major challenge for the government and the banks.

Banks witness maximum withdrawals in the first week of the month. According to a report by the Business Line, almost 50-70 per cent of salary withdrawn in the first seven days.

Considering that most bills and dues are paid in the first week of the month, the employers will face a tough time providing cash to the employee. The unorganised sector, which primarily deals in cash payments is one of the worst hit sector. On the other hand, the government is trying to ease the cash crunch by providing cash to its employees.

The central government and a few state governments have decided to help their employees by paying a certain portion of the salary in cash. However, a few state governments are even finding it hard to pay a full month's salary to its employees . 

Post demonetisation, states are struggling with revenue generation. Chief Minister of Telangana, K Chandrasekhara Rao, has expressed his concerns on the falling revenue of the state and has requested help from the RBI to provide Rs 5 crore to pay Rs 10,000 in cash to each of  its employees.

Will you get your salary on time?

The private sector will also face the brunt of the cash crisis as smaller businesses will struggle with the methods of payment. To assume that the entire population of the country will adopt tech-savvy payment methods within few weeks after demonetisation is unfair.

Corporate sector, on the other hand, will witness minimum hindrance as they already cater to a technologically sound work force.

Expect longer queues outside banks and ATMs

Most companies and organisations will have to deposit salaries directly to bank accounts which only means that the queues outside ATMs and banks are just going to get longer.

Unless there is a fundamental shift in the attitude of banking methods, the country will struggle to make transactions in the coming first weeks of the month. Tenants and landlords will have to resort to bank transfers instead of cash and paying bills will have to become a digital affair.

 

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