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Banks frown upon clients lugging huge sheafs of cash
George Smith Alexander in Mumbai |
March 26, 2003
Clients who cart sheafs upon sheafs of cash -- such as big petrol pump owners and wholesale traders -- are no longer serenaded in Bankingdom.
The reason? Bankmen, who predominantly use fingers to count currency, find it bad economics -- and arithmetic.
Says a senior banker: "One of the dirtiest jobs in the banking business is counting cash. Cash lying in vaults is useless. Handling cash is expensive as it is labour intensive and more of teller time translates into higher costs for the bank. Besides, the lobby space is occupied for a longer time. Then there are instances of forgery, which adds to our bill."
The rejection phenomenon is not restricted to profit-conscious private banks and foreign banks. Some of the bulkier public sector peers are also moving along this path in a quest for efficiency.
Government departments, too, are unwelcome. One example: the country's biggest currency gusher, the Railways.
A public sector banker said cash coming in from the department lies unchecked, sometimes even for weeks, since counting the pile is an onerous task.
"Some private and foreign banks accept utility (telephone and electricity) payments on behalf of public sector and central undertakings over the internet and through ATMs. None of them takes cash," she points out.
Banks are adopting different strategies for these customers. The common thread in their strategy is to ask most the customers to have a higher average balance.
The average balance which customers are required to keep for higher-end current accounts in a private bank is up to Rs 100,000.
Traders have to keep a bigger float with the bank than these customers. Private and foreign banks sometimes levy service charges for cash pickups from customers who have large cash deposits.
"The cash pick-up service is normally free for customers. However, for these customers a service charge is levied and they are more than willing to pay this. In some of the branches, the bulk cash deposits are taken after banking hours," says a senior foreign banker.
The best solution for the banks is to deposit this cash in currency chests at the earliest.
"As soon as the cash is transferred to currency chests it becomes a part of the cash reserve ratio, which the bank has to maintain with the Reserve Bank of India," points out a senior banker.
Smarter private banks which have the cash pick-up facility take the cash directly to the currency chests. It saves a lot of time.And time, it seems, is indeed money on Banking Street.