A year after demonetisation, currency chests of banks still saddled with crores in old notes

The Indian Express spoke to a number of officials working with currency chests in Pune, as well as senior officers of various banks, who said that almost all the currency chests in the city still hold a bulk of the scrapped notes, as the RBI has been unable to take them away due to the limited disposal capacity at its offices


A year after demonetisation, its success or failure is still a matter of debate, with the government and Opposition still making contradictory claims. While people had to suffer considerably in the aftermath of the decision, even bankers were hit by the decision to withdraw high-value currency notes, and their work increased considerably. Over a year after the Centre announced the move, some bankers continue to feel the effects of demonetisation.

These are the officials who work with the banks’ currency chests, as they are left holding the demonetised Rs 500 and Rs 1,000 notes deposited by lakhs of customers. Officials working with currency chests in Pune, as well as senior officers of various banks, have said that almost all the currency chests in the city still hold a bulk of the scrapped notes, as the Reserve Bank of India (RBI) has been unable to take them away due to the limited disposal capacity at its offices. The notes remain the property of the RBI, but are stored in the chests managed by the banks concerned.

Bank officials pointed out that this scenario often affects their routine currency distribution function, as the storage space is used up by scrapped notes, leaving limited space for currency used in their routine operations. The RBI has three regional offices in Maharashtra: the one in Belapur, Navi Mumbai, caters to 11 districts including Pune as well as the state of Goa; the Fort Regional Office in Mumbai which caters to parts of the state, Gujarat, Madhya Pradesh and Chhattisgarh, and a third one in Nagpur with jurisdiction over the whole of Marathwada and Vidarbha regions, apart from a few districts of Chhattisgarh and Madhya Pradesh.

As many as 189 currency chests are connected to the RBI’s regional office in Belapur, 29 of which are in Pune district. Staffers working with currency chests and bankers, who spoke on condition of anonymity, said that in the days after November 8 last year, the chests started filling up with demonetised notes. “At that time, the focus was on remonetisation and dealing with the shortage of currency, so the old notes remained with the banks’ currency chests and nobody complained about it.

However, when the RBI didn’t give us any guidelines till May, we started to follow up with the apex bank, to get rid of the old notes,” said a senior officer of a leading bank. “The old notes were taking up considerable space in the chests… and our distribution operations were affected due to the limited storage space in the vaults. After our follow-ups, RBI started picking up the notes from the chests in August 2017. They used to pick up a portion of old notes from each chest, instead of emptying out a single one,” said the officer. The officials pointed out that the capacity of the RBI, to dispose of old notes, was limited. Usually, only old soiled notes, counterfeit currency or notes of a certain batch that has been withdrawn can be shredded, pulped or burnt. “With demonetisation, suddenly 1,500 crore pieces of invalid currency were created. So, it was understandable that the RBI will take a long time to dispose of all the old Rs 500 and Rs 1,000 notes,” said an official working with the currency chest of a nationalised bank. He said that according to his estimate, it may take the RBI two to three more months to take away all the notes.

The senior manager of a bank, who claimed that the bank’s currency chest still holds “over Rs 800 crore” in old notes, said he has been “following up rigorously” with the RBI’s Belapur office. “Rs 500 to Rs 1000 old notes occupy almost 60 per cent of the total capacity of the chest, leaving only 40 per cent space for our functional storage. We were promised that the old stock will be picked up by October but it’s yet to happen,” said the manager. He said that the bank was hoping that relief will arrive soon after the currency chest of Canara Bank was emptied of old notes by the RBI earlier this month.

The situation is no different at the 12 currency chests held by the State Bank of India in Pune district. Officials working with the Pune Treasury Branch of SBI, which coordinates distribution of currency for about 160 branches in Pune district, along with smaller banks, said that their vaults too were full of old notes. “In the third week of September, a portion of the old notes stored in our currency chest at the Treasury Branch, as well as parts of other SBI currency chests, were picked up. We were told that more old notes will be shifted to the Belapur office for disposal this month. It’s yet to happen,” said the official . However, the bankers admitted that the situation was much better now, when compared to the months after demonetisation. “We were forced to keep the cash in steel trunks on the floor, because the vaults were full. We managed to shift some of the old notes by taking them with us to the RBI’s Belapur office, when we visited it to pick up new notes,” said an official.

An assistant manager with a suburban branch of IDBI Bank shared that due to shortage of space in the bank’s currency chest, they often refuse to accept bundles of Rs 10, Rs 20 and Rs 50 notes from customers. “We have either stopped accepting Rs 10, Rs 20 and Rs 50 bundles from customers or we force those who withdraw large sums to take a portion of the amount in smaller denominations, to get rid of these bundles,” said the assistant manager.