Rs 500, Rs 1000 notes banned: Banks will have to slog hard to replace currency

The demonetising of the existing Rs 500 and Rs 1,000 notes will be a tough task for the banks to handle in the short-term as people will be queuing up to exchange the notes.

However, top bankers are unfazed by the decision. Top bankers said they would work round the clock to ensure that customers do not suffer and the situation is handled smoothly. Arundhati Bhattacharya, chairman of country’s largest lender State Bank of India said demonetisation of high value notes won’t be a problem as the bank has done it before.

“We have just now been advised of the government move to demonetise current series of Rs 1,000 and Rs 500. We have handled demonetisation earlier and will do so again,” Bhattacharya stated.

Banks will remain closed on Wednesday in order to withdraw the existing notes from counters and ATMs. They would, in turn, “strive to restock ATMs at the earliest and make them operational. Government has given enough exemptions to ensure that urgent needs are met. We will work round the clock to ensure that customers have a smooth experience,” Bhattacharya said.

ICICI Bank’s MD & CEO Chanda Kochhar said the move to junk the existing high value notes “is perhaps the most significant move ever taken to curtail the parallel economy,” and that this “will give a sharp boost to all formal channels of payment which in turn will help the formal economy to grow.”

Speaking at a press conference after the PM’s televised address to the nation, RBI governor Urjit Patel assured that there has been no breach in security of the existing notes, but the fake notes in circulation look similar and could be difficult to identify by untrained eyes.

“As of today we have ramped up production of the new series of notes,” the RBI governor said. The new Rs 500 and Rs 2,000 notes would start coming to banks from November 10 onwards, said Economic Affairs Secretary Shaktikanta Das.

But some bank customers are already in panic mode and bank ATMs had long queues as people were seen withdrawing cash below Rs 500 multiple times. Bankers say the ATM handling charges will increase as the same machines will have to be replenished several times in a day.

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