Violating the lockdown and social distancing norms, banks in India are witnessing a swirl of customers on a daily basis at a time when the country is grappling with a catastrophic second wave of COVID-19. Rising economic uncertainty, fear of prolonged lockdowns, and medical emergencies are some factors as to why people are withdrawing more cash.
Price Rise, Uncertainty, and Stricter Lockdown: Major Issues
According to some people, the main reason behind the long queues are the lockdowns imposed by state governments or local authorities due to which they are forced to get in lines and withdraw their savings to survive.
Speaking to Sputnik, Brijesh Singh, a Delhi-based factory worker, complained about an increase in prices of essential commodities such as rice, flour, and vegetables.
“Firstly, due to the lockdown, the factories where we work are closed down following which we were forced to use our savings to survive. So we go to the bank almost every fourth to fifth day", Singh said.
Secondly, Singh claimed that local grocery stores have inflated the prices of goods.
"Giving excuses of shortage of supply, the shopkeepers have started selling basic items at a higher rate. We do not know how to use these online payment apps, which also forces us to withdraw cash and deal in it", he stated.
The wholesale inflation across the country rose to an all-time high of 10.49 percent in April, data released by the Ministry of Commerce and Industry showed.
Another worker mentioned that the pandemic had taken away their livelihood while the little savings they had would run out soon.
"I have to pay for my room's rent and with the reduced frequency in traveling options due to the lockdowns, I feel we are kind of stuck here. I have been forced to come to the bank after visiting more than 6-7 ATMs which were found to be non-operational. It is frustrating. I want to ask the authorities where would we get cash when the ATMs are running cashless. We are forced to crowd together at the banks", said Durganand Chaudhary.
He further mentioned that the Delhi government has been extending the lockdown every week so people need cash to buy their daily needs.
Demand For Cash Rises
The digital transactions in India picked up during the demonetisation of 2016 and continued to be on rise after that, but over the last few months, the reliance of the public on cash has increased steadily.
The Reserve Bank of India (RBI) has recently released data which shows that the total currency in circulation reached a two-decade high in April 2021.
In the six-week period between 27 February and 9 April, the amount of currency in public hands rose by $8 billion, RBI data shows.
Most of the withdrawals happened when states were imposing stricter lockdowns. This indicates that people withdrew more money, fearing the imposition of a complete lockdown. According to bankers, cash demand has spiked mostly in semi-urban and rural areas.
#Srinagar: Long queues of people outside banks and in markets have betrayed all public seriousness towards the officially announced #coronacurfew in the Valley.#Banks started business on Tuesday after three days of remaining closed on account of holidays. pic.twitter.com/1TUawHWZx3
— Journalist Siraj Noorani (@sirajnoorani) May 11, 2021
According to the RBI, the amount of currency in public hands is arrived at after deducting cash in banks from the total currency in circulation. Currency in circulation, which includes notes, rupee coins, and small coins, refers to cash or currency within a country that is physically used to conduct transactions between consumers and businesses. It effectively means the currency that individuals across the country hold themselves.
Medical Experts Issue Alarm
After several reports of people queuing outside banks to withdraw money, medical experts have warned of the chances of another spike in cases.
Chief Medical Officer Shopian (Jammu and Kashmir), Dr Arshad Hussain Tak, said, “We will bring this issue to the notice of the deputy commissioner. However, people themselves should know that these things will create massive problems for them and their families”.
India has been witnessing a massive surge in the number of COVID-19 cases on daily basis. The country recorded 276,110 new COVID cases while 3,874 people died due to the virus over the last 24 hours.
