Post Demonetization: Banker’s Narrations

            State Bank of India Chairman Arundhati Bhattachrya, on and often categorically is advising the central government on many issues.  The latest suggestion is worth to note.  The government should charge a levy on cash transaction above certain limit after normalcy restore;   paradigm change will be noticed soon from cash to cashless transaction.  “Cash is a huge burden.  We don’t understand it as it is not immediately visible.  The physical infrastructure to maintain cash is not cheap.” She said.  The present cash to GDP ratio (12%) reflects the poor digital transaction, although efforts are now underway in this regard, according to SBI chief.

 

P. Chidambaram former Finance Minister levied cash withdrawal tax of ten points above Rs 10,000 in 2008 with the view to desist from prevention and laundering of black money, but was abolished in 2009.  Her explicit problem is handling of cash, as it is a long and tough exercise.  The bank has to bear the cost of maintenance of infrastructure need to keep cash, payment to staff, security and transportation cost, etc.  Due to paradigm shift, the charges of re-calibration of ATMs and additional auditing charges are bound to borne by the banks.  “The cost is something that the government should look at and help us”, she asked.  The additional financial burden is going to hamper the total profit during current fiscal year; thus will nose dive the share prices of PSU and private banks.

All of a sudden the complete banking system is in limelight of print and TV media.    The Reserve Bank of India, Central Government and general public are putting high pressure on day to day functioning of banks.  On the other side, the image of banks has maligned and tarnish by some unscrupulous bank officials.  Banks are hiring services of hundreds of Chartered Accountants to restore its credibility.  The CA firms will audit the branches to unearth any irregularities on the part of bank officials and customers.  Monitoring the footage of CCTV will assist them to locate the culprit.   They will scrutinize the documents as per day to day guidelines led down by RBI and Finance Ministry.  PAN verification of high value transaction, bulk disbursement, Jan Dhan accounts, NEFT / RTGS transaction and many more scrutiny will be undertaken before finalization of the report.  The auditors should not take it lightly using random sample method of auditing.  The government and RBI must keep control over CAs nefarious activities.

From political point of view, the governmental agencies must exercise arduous task regarding any political angle in sabotaging the image of ruling party by the bank officials.  It is an axiom that bank officials are hand in gloves with hawala marketers, builders, black money hoarders, businessmen, industrialist and many more.  What dirty tricks they are playing since decades needs to be ascertained; otherwise the demonetization program undertaken by the government for the upliftment of common public will be sabotaged in the initial stages itself.