Companies including Prestige, Hitachi have sought at least 10 lakh cards from banks for their staff, especially blue-collared workers
Prepaid cards have come to the rescue of several companies as currency notes are in short supply during the salary time.
Companies have queued up to get prepaid cards from banks to issue to their staff in lieu of paying salaries in cash, especially to the blue collar workers.
Several banks told DNA Money that requests for at least 10 lakh prepaid cards have come from just a bunch of companies so far. The companies that have put in the request for such cards include Prestige, Hitachi, Mangalore Chemicals, KS Exports and Capricon Food, among others. The number is likely to go higher as a large number of companies are seriously looking at this option.
Manju Agarwal, deputy managing director, State Bank of India (SBI), said, "The number of requests for prepaid cards is rising significantly as companies want to dispense salaries through such cards."
SBI is in the process of issuing 4.28 lakh prepaid cards and over 5.4 lakh enquiries are pending with the bank.
Last week the labour ministry in a letter to banks requested the lenders to open savings accounts for the workers in the unorganised sector by opening camps in industrial hubs so that money can be electronically transferred to the employees.
Private banks such as ICIC Bank are also seeing a large number of prepaid card and electronic transfer requests. Some banks like HDFC Bank have also tied up with retail outlets to dispense cash for the people. The cash collected at these shops pooled so that customers can use their debit cards to withdraw money even at the shops.
HDFC Bank has partnered with Federation of Retail Traders Welfare Association (FRTWA), a trade body representing shop owners, to offer cash withdrawal facility at over 50 large, prominent retail stores across metros. Customers can withdraw cash at these stores by swiping their debit cards using the Point-of-Sale (PoS) machines deployed at these stores.
In Mumbai, for instance, the machines of the bank will be installed in stores like Roopam, Benzer, Amarsons, Kalaniketan, Premsons, Asiatic, Libaz, Seasons, Roopmilan, Metro, Catwalk, and Mochi. These stores will use cash collected from their sales for the withdrawals. The withdrawal limit has been capped at Rs 2,000 to cater to as many people as possible.
An ICICI Bank spokesperson said, "Demand from companies for our prepaid card solutions has gone up significantly. These cards are a convenient alternative to salary payments in cash as they can be used to make purchases at stores and online websites. They can also be used at ATMs to withdraw currency notes. We are also deploying PoS machines at various office premises to facilitate cash withdrawal by their employees.
"We are enabling companies to pay salaries using a wide range of our digital payment solutions. These include cash management payment solutions through multiple modes such as RTGS, NEFT and IMPS. We are also taking setting up special camps at various companies on our digital banking solutions to create more awareness among customers about digital payments."
A senior banker said, "Prepaid cards may not be the final solution because at some point in the chain, people will need hard cash for transactions. Some companies are also dispensing food coupons to their employees to get over the cash crunch."
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