There's one sector which gained more than any other from the centre's demonetisation move -- the banks. Perennially reeling under the burden of bad loans, they seemed to have got a respite even as their customers had to go through wrenching pain.
"Demonetisation was a blessing in disguise for us, as the number of new accounts has gone up 25 per cent over the months and 40 per cent of our customers have switched over to internet or mobile banking, reducing their visits to the bank for cash or other transactions," State Bank of India (SBI) senior manager S Srinivas Rao said in Bengaluru.
Banks have also seen a surge in the demand for debit and credit cards, online transactions and fund transfers through RTGS and digital payments. The banks also became flush with cash for several weeks, allowing them to provide easily for their doubtful debts.
Though banks are back to normal operations, economic slowdown, poor credit off-take and dwindling business of their customers after the Goods and Services Tax (GST) regime came into being on July 1 have made them pause over their gains from the note ban.
But it was not without pain for the banking sector. The dramatic nationwide announcement on November 8 by Prime Minister Narendra Modi and the secrecy of the move meant the banks turned into battle zones between employees and thousands of customers who became agitated as time went by to exchange or deposit their banned notes.
"It's better to forget the harrowing time we had during those 50 days, as we were at the mercy of the treasury for the new notes (Rs 2,000 and Rs 500) or lower denominations to exchange them for the old notes," recalled Rao.
As 86 per cent of the currency in Rs 500 and Rs 1,000 notes went out of circulation, it not only disrupted banking operations but also put undue pressure on bank employees who were not trained or prepared to deal with such a chaotic situation.
"It was a double whammy for us as we were under severe pressure from the management to handle the volatile situation with patience and serve the customers with limited staff and resources," Karnataka Bank's industrial finance branch manager, Sadananda Kumar, said.
With hundreds of ATMs (Automatic Teller Machines) running out of cash or remaining dry for days and weeks, banks faced customers' wrath due to cash crunch even in lesser denomination notes of Rs 100, Rs 50, Rs 20 or Rs 10.
"Receiving or exchanging banned notes was also tough, as hundreds of ordinary people with no bank account also queued up with our customers. The problem turned worse, as many of them didn't have PAN card or Form 60, which was mandatory to deposit or draw above Rs 50,000 in lieu of the old notes," lamented Rao.
Clueless about the note ban and reasons for their money becoming worthless, thousands of unbanked people panicked and rushed to the banks clutching Rs 500 and Rs 1,000 notes, hard-earned or saved over the years, to exchange for the elusive new notes whose short-supply could not meet the sudden demand.
"While the jury is still out on the pros and cons of the note ban, we were caught between the government and the people, as we had no answers for their questions or sufficient cash to exchange or meet their demand," said a state-run bank regional manager who did not want to be named.
The demonetisation also led to a dramatic spike in deposits of the banned notes by the existing and new customers during the 50-day window, while withdrawals were stymied by the cash crunch.
"The rush for depositing banned notes less than Rs 50,000 at a time was more and frequent than for withdrawals, as many customers were wary of giving the mandatory PAN number or filling Form 60 fearing they would be questioned by tax officials later on the source of their money," pointed out the manager.
The note ban resulted in manifold increase in CASA (Current Account and Saving Account) deposit ratio of the banks, giving enough funds to make provisioning for the rising non-performing assets (NPAs).
But it took a heavy toll of the banking employees, especially women and officers, as they had to work for 12-18 hours a day initially without even a weekly off, leave or holiday.
"Besides facing angry and impatient customers for days and weeks, we were overburdened with paper work and computing. We were under pressure to meet the needs of business and regular customers as their transactions were mostly in cash. We had to ration cash to meet the needs of all customers and avoid accusations of being partial to some at the expense of others," said Lata Rao, a bank officer.