Gujarat’s urban cooperative banks are facing a severe shortage of fresh currency notes ahead of Diwali, with several banks receiving only about 10% of the quantities they had requested and some sending teams to other states to arrange supplies, according to banking representatives quoted by the Times of India.
The Gujarat Urban Cooperative Banks Federation (GUCBF) and the South Gujarat Cooperative Banks’ Association (SCOBA) have written to the Reserve Bank of India seeking higher allocations, particularly of Rs 10, Rs 20 and Rs 50 notes. Banks said the currency supplied so far has largely consisted of Rs 100 and Rs 500 notes, even though festive demand is concentrated in smaller denominations.
Jyotindra Mehta, chairman of GUCBF, said several urban cooperative banks had received barely 10% of their fresh-currency indents. The federation has sought an additional 40% allocation of fresh notes, especially smaller denominations. Mehta said customers shifting to other banks could result in a permanent loss of business for urban cooperative banks.
Urban cooperative banks have traditionally depended on nationalised banks for currency supplies because most do not operate their own currency chests. This places them behind the customers of the banks from which they obtain cash, particularly during periods when demand rises sharply. The shortage has become more acute this year, according to the banking representatives cited in the report.
Mukesh Gajjar, immediate past president of SCOBA, which represents 42 urban cooperative banks in south Gujarat, said the association had asked for additional supplies and timely distribution. Fresh notes are sought during Diwali and the New Year for gifting, bonus payments and religious ceremonies.
Surat People’s Cooperative Bank has sent teams accompanied by armed security to Mumbai to procure fresh notes, said its general manager Kalpesh Shah. The bank reported that its supply had fallen by more than 35% compared with last year. Shah said the bank has a business of Rs 13,800 crore, more than three lakh customers and 36 branches, but receives limited fresh-currency supplies because the banks it depends on prioritise their own customers. The bank also incurs insurance and travel costs while arranging supplies outside Gujarat.
Ahmedabad-based Aapni Sahakari Bank Ltd has also received only about 10% of the fresh notes it required, its managing director Jalpa Jain said. Jain said the demand peaks during the festival period, when customers seek new notes for religious ceremonies and gifts.
The shortage has extended beyond banks. Jayendra Tanna, president of the Gujarat Traders’ Federation, said traders had reported difficulty obtaining both new currency notes and coins. Businesses traditionally worship cash and account books during the auspicious muhurat marking the start of a new financial year.
The reported shortage has also created a premium market for fresh notes. Agents in Ahmedabad and Surat are reportedly charging an additional Rs 250 to Rs 350 for bundles of Rs 50, Rs 20 and Rs 10 notes, while bundles of Rs 100 notes are available at a premium of around Rs 200. Areas named in the report include Manek Chowk in Ahmedabad and Varachha, Mahidharpura and Bhagal in Surat.
The banking associations’ request is now before the RBI’s issue department, with the institutions seeking additional allocations and more timely distribution before the festival period intensifies.
