"It's a precautionary measure. You know about recent incidents (bank robberies). We don't have security here, it's a far off area and higher authorities have taken a decision to stop all cash transactions from these branches," said Zubair Ahmad, an employee at a bank in Pulwama.
The people who had come to withdraw their money were tuned back. Police say Lashkar-e-Taiba is behind the bank robberies in south Kashmir.
After demonetisation, around a dozen banks have been looted in the Valley. In some branches, the robberies were caught on camera.
On Friday, police put up posters of terrorists allegedly involved in bank robberies and announced rewards for those who can help track them down.
"Lashkar has been found involved in these robberies. Lashkar terrorist Majid has been identified... while some of his accomplices were masked, name of another LeT terrorist Shabir has also come up," said Rayees Bhat, Senior Superintendent of Police, Pulwama.
On Monday, five policemen and two private bank guards were killed after a bank van was attacked by terrorists in Kulgam.
Officials say cash transactions will now be made only in the banks located in towns in relatively safer areas having adequate security.