Check repeat money exchangers, use indelible ink: Govt to banks

Situation turned from bad to worse today with bank IT networks breaking down and ATMs running out of cash, prompting government to direct the use of indelible ink mark to weed out repeat currency exchangers and syndicates so as to cut unending queues.

Serpentine queues, with some as long as a kilometer were seen nationwide at banks which opened after a day's break but soon crumbled under pressure in the absence of supporting cash vending machines.

Several bank branches saw their networks break down even as government looked at ways of augmenting supply of new 2000 and 500 rupee notes, which have been introduced in place of the scrapped older higher denomination Rs 500/1000 notes.

Government said it is also watching zero-balance Jan Dhan accounts which, according to reports, are being used to convert black money into white.

It has set up a high-level committee under Cabinet Secretary P K Sinha to monitor supply of essential commodities.

The steps follow Prime Minister Narendra Modi holding second late night review meeting in as many days to assess situation developing following domination of currency. The meetings on Sunday and Monday night were attended by Finance Minister Arun Jaitley and RBI Governor Urjit Patel among other officials.

Giving details of the meeting, Economic Affairs Secretary Shaktikanta Das said the government has set-up a high-powered group under the Cabinet Secretary to monitor supply of essential goods in the wake of disruption of trade due to shortage of currency notes.

Besides, a task force has been constituted to monitor circulation of fake currency notes in vulnerable areas and to keep a watch on black money being deposited in the system.

"It has come to notice of the government that in many places the same people are coming back again and again and we have also received reports that certain unscrupulous elements who are trying to convert black money into white have organised groups of innocent people and are sending them from one branch to another branch to exchange notes and get Rs 4,500," he said.

"As a result what is happening is that the benefit of withdrawal of cash is getting restricted to smaller number of people...to prevent such kind of misuse, the branches of banks to take recourse to use of indelible ink marks for disbursement of cash," he said.

On the details of use of indelible ink, he said this will be made available in the major cities from today itself.

The operating instruction will be given to banks for the mark, he added.