Pay day looms in India. And as Bloomberg reported, things may get ugly. The banking sector, the newswire reported, is girding for a tough response from “angry mobs” as they line up at banks and ATMs to get cash. This is, of course, in the wake of the cash crunch spurred by the government’s removal of 500-rupee and 1,000-rupee notes.
The newswire reported that one executive at the All India Bank Employees’ Association has estimated as many as 20 million people will be looking to get paid, and since they make payments in cash, they could get riled up as banks are operating with roughly half the cash on hand that might be needed. The association has opted for police protection at several locations.
If banks do, in fact, run into the problem of dwindling funds, they will have to go to the Federal Reserve. The banks themselves are operating with 800 million–1.2 billion rupees in cash — below the typical 1.5 billion held on hand. Withdrawals have been capped at banks at 10,000 rupees, even while the government has capped them at 24,000 rupees.
One beneficiary: the prepaid card industry, where smaller employers have been buying up millions of cards.