Cash handling in banks

This refers to “RBI to rewire cash handling system” (August 27). The process of cash handling in banks needs an overhaul. As per the existing arrangement, currency chests of banks are mandated to feed their branches with cash early in the morning and pick-up excess cash later. Since cash held overnight in these chests counts for CRR requirements, banks squeeze branches to manage these cash holding limits.

As the number of cash carrying vans is limited, often the pick-up is scheduled at odd hours. If the service of handling cash is handed over to cash logistics companies, this problem can be solved. The outsourced agency can be called after business hours and entire spare cash could be offloaded without impacting customer service. Since these firms are already handling the servicing of ATMs for which they pick-up cash from the bank’s currency chest, there will be more synergy in operations and cash handling.

The progress could be smooth in the private banking sector. The author fears that in public sector banks (PSBs), the unions could create issues and ahead of the general elections, the government may not want to ruffle feathers.

The process could be first started for the private sector banks and then introduced in PSBs as by the time this transition completes, elections would be over. Most PSBs need revamp. A closer look into how cash is handled and the personnel involved could provide avenues for cost cutting. For example, there is a position of a cash peon who has no role in the present banking scenario. The post can be abolished and the staff can be absorbed for performing other duties. Unions are aware that their existence is at stake and should avoid making a token noise.

K V Premraj Mumbai