6 months of demonetisation: Cash back to being king, shortage at ATMs continues
Prominent Indian banks have claimed there is no cash crunch, but fact remains that ATMs run dry during long weekends. The crisis began in November when the Union government pulled 500 and 1000 rupee banknotes from circulation as a part of its crackdown on black money.black money crackdown Updated: Jul 19, 2017 15:42 IST
It has been six months since demonetisation, but, “Is there cash in the ATM?” continues to be the most popular question among Indians, even today.
Though prominent Indian banks claim that there is no cash crunch and the currency in circulation is in keeping with demand, but they also agree that ATMs run dry during long weekends.
On November 8, 2016 the Union government yanked out Rs 500 and Rs 1000 banknotes, 86.9% of the money in circulation.
This caused long queues outside ATM kiosks and banks for several months.
The shortage at ATMs had eased in January with the government pumping new 500- and 2,000-rupee notes into the system.
But cash logistics companies claim the supply is still inadequate, a view even endorsed by citizens.
“We have received complaints of ATMs going dry from several places. The fact is that only 60% of the currency in circulation has been replenished. So there is still not enough cash for adequate refilling of ATMs and we are struggling. The amount of money given by banks varies,” said NSG Rao, the secretary of the Cash Logistics Association.
The logistics association said banks supply adequate cash for ATMs during the beginning of the month, when salaries are being paid. After that, the supply thins.
Rao adds that RBI has not shared specific data on currency being pumped back into the economy.
The RBI in a report in March said that 78% of consumer payments in India are in cash. And data from the central bank shows that cash transactions though halted during the first two months after demonetisation, has been increasing since January.
“The crunch continues with cash withdrawal levels going back to pre-demonetisation days,” explained Ashwin Parekh, banking expert and managing partner, APA services.
According to an RBI data, Rs 13.32 lakh crore was in circulation at the end of March, much lower that Rs 17.97 lakh crore in the system on November 4, just days before the demonetisation.
A banker explained that with the RBI relaxing all restrictions on withdrawals in March, people have gone back to cash transactions, causing the crunch.
When Prime Minister Narendra Modi made the shock announced in November the total amount of high denomination currency circulating in the system was estimated at Rs 15.44 lakh crore of which Rs 8.58 lakh crore was in old Rs 500 notes and Rs 6.86 lakh crore in Rs 1,000.