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Currency crisis hits Telangana
The proposed Financial Resolution and Deposit Insurance (FRDI) Bill by the Union government and the sudden spurt in the construction activity and infrastructure development in the state have a sort of currency crisis in Telangana.
Hyderabad: The proposed Financial Resolution and Deposit Insurance (FRDI) Bill by the Union government and the sudden spurt in the construction activity and infrastructure development in the state have a sort of currency crisis in Telangana.
The availability of cash in banks has gone down below 50 per cent of the total requirement in the state in the recent weeks. Top officials of the Finance department attributed mass withdrawal of money from fixed deposits in the banks by depositors as being one of the main reasons for the scarcity of cash in banks in Telangana.
Officials said the FRDI Bill had created panic among the people particularly the middle-class families. Rumours spread by some sections that the new financial Bill will force the depositors to cough up more service charges to the banks for parking money. Frightened depositors flocked to the banks and withdrew money in huge volumes in the recent weeks.
Another reason for the currency crisis was the private builders and contract agencies withdrawing money in bulk from the banks to take up construction activity. Following sudden boom in the realty trade particularly in Hyderabad and some municipal corporations in the state, developers have taken up big ventures.
Post demonetisation, the contract agencies also hastened works accorded by the state government, particularly the irrigation projects, Mission Bhagiratha and other infrastructure works for which huge money is required to pay salaries and buy raw material and machinery.
“The growing construction activity in the private and public sector left the banks dry in cash reserves for the last two months,” officials said. “As a result, banks have failed to fill ATMs with required cash to meet the demand,” they said.
The officials said the people were not depositing money equal to the withdrawals they were making in the banks. The other factors for currency crisis was the sudden stoppage of circulation of Rs 2,000 currency notes and the delay in re-calibrating ATMS to dispense Rs 200 notes, the officials said and pointed out: "After demonetisation, Rs 1.4 lakh crore cash in cancelled notes came back to the banks and equal amount has been released by the RBI. This money again went out of the banks into the hands of the people and many of them are not coming forward to deposit it in the banks."
