In­dian bank shares slump elu­sive20 as new notes are

Cash ma­chines run dry

Kuwait Times - - BUSINESS -

MUM­BAI: In­dian bank shares took a ham­mer­ing yes­ter­day as cus­tomers strug­gled to get their hands on new notes three days af­ter the gov­ern­ment’s shock de­ci­sion to with­draw high­de­nom­i­na­tion bills from cir­cu­la­tion. Snake-like queues formed out­side banks for the sec­ond day run­ning as in­creas­ingly-des­per­ate In­di­ans across the coun­try tried to ex­change worth­less 500 and 1000 ru­pee notes for the new 2,000 bills, in­tro­duced on Thurs­day.

But many banks ran out of the new notes and cash ma­chines ran dry, leav­ing many who queued for hours out of pocket. ICICI Bank plunged 5.32 per­cent yes­ter­day, State Bank of In­dia slumped 3.09 per­cent while the Bank of Bar­oda closed down 2.49 per­cent on the Sensex in­dex of Mum­bai’s Bom­bay Stock Ex­change. The Cen­tral Bank of In­dia also slid 2.98 per­cent. An­a­lysts said bank stocks were tak­ing a short-term hit from In­dian Prime Min­is­ter Naren­dra Modi’s shock de­ci­sion.

“The sud­den an­nounce­ment has caused a problem for banks but the sec­tor will even­tu­ally ben­e­fit from the de­mon­e­ti­za­tion drive,” Su­jan Ha­jra, chief econ­o­mist at bro­ker­age firm Anand Rathi se­cu­ri­ties, told AFP. Traders com­plained that a gov­ern­ment-en­forced limit on with­drawals meant they were un­able to pay staff. “We had paid salaries to around 700 work­ers on Mon­day but most of them haven’t been able to change their money at banks and are com­plain­ing about a cash crunch,” Vikram Deep Singh Sekhon, a tea gar­den man­ager in West Ben­gal, told AFP. “They say that be­cause of the sit­u­a­tion they haven’t been able to buy some of the most ba­sic daily ne­ces­si­ties.”

Modi stunned the coun­try late Tues­day when he an­nounced in a tele­vised ad­dress that 1,000 and 500 ru­pee ($15, $7.50) bills would be with­drawn as part of a blitz on “black money” and fake notes. The gov­ern­ment has tried to re­as­sure wor­ried ci­ti­zens that only tax evaders will suf­fer un­der the move. How­ever, many low-in­come peo­ple par­tic­u­larly in ru­ral ar­eas - who don’t have ac­cess to bank ac­counts and store cash at home, com­plain that their sav­ings have been com­pletely wiped out.

Yes­ter­day, In­dia’s cen­tral bank moved to re­as­sure wor­ried bank ac­count hold­ers that suf­fi­cient sup­plies of money were in the sys­tem and that it was do­ing all it could to dis­perse the notes. “There is enough cash avail­able with banks and all ar­range­ments have been made to reach the cur­rency notes all over the coun­try,” the Re­serve Bank of In­dia said in a state­ment. How­ever, it warned that it would take time for com­mer­cial banks to “re­cal­i­brate their ATMs” and urged mem­bers of the pub­lic to be “pa­tient”.

— AFP

HY­DER­ABAD: In­dian cus­tomers pose for a selfie with a new 2,000-ru­pee cur­rency note at a bank yes­ter­day.

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