Ashish Mehta, owner of a Delhi-based engineering consulting firm, is in a fix: he has 10 employees, none of whom has a bank account, and given the post-demonetisation cash crunch, Mehta does not have enough cash to pay their salaries.
“I asked them to open bank accounts into which I could transfer money, but even that won’t help them if they can’t withdraw the money,” Mehta said.
Many companies, big and small, are in a bind over paying their employees and trading partners. Small manufacturing units, worst-hit by the cash crunch and the weak demand, are retrenching employees.
GV Sreedhar, Chairman, All India Gems & Jewellery Trade Federation, said a Kolkata-based Federation member had informed him that he had sacked 88 of his 108 karigars (artisans).
A few large corporate entities are helping their employees out in novel ways. Flipkart partnered with banks to set up currency conversion desk at its offices. Budget hotel chain Treebo paid out reimbursements to its field staff in the form of SODEXO coupons, which can be used to purchase groceries.
Others have encouraged their employees to download digital wallets for money transfer. Naveen Surya, Founder of ItzCash, said, “Small and medium-sized companies are opting for prepaid cards over cash payments.” More than five million cards were sold in the past week, and 40 million may be sold through December, he claims.
Mphasis and Capgemini India paid out salaries five days earlier to help employees beat the bank rush. Business process management company HGS got its banking partner to deliver cash through PoS machines right at the employees’ desks.
TV Narendran, Managing Director, Tata Steel, said the company paid its contractors by cheque and insisted that salary payments to third-party contract labours be credited to their bank accounts to establish a money trail. It has also been pursuing dealers and retailers to install PoS machines to execute orders.
Public sector unitsGovernment establishments, however, don’t have such flexibility since under the law, wages are to be paid in current coin or currency notes.
BMS General Secretary Virjesh Upadhyay said his organisation had sought a relaxation of the provison, but AITUC General Secretary Gurudas Dasgupta said any such move would violate the Supreme Court order on payment of wages in cash.