ATMs running 30% short of cash 5 months after note ban: Is this the new normal?
The use of cash is back in circulation and increasing with the removal of withdrawal restrictions. This is causing a shortage as the remonetisation exercise is yet to be completed.Updated: May 08, 2017 07:14 IST
Bank ATMs are appearing to be running dry again — a problem that vexed these machines after the government scrapped 500- and 1,000-rupee notes last November and triggered a cash shortage.
The government’s demonetisation of the two high-value notes wiped out 86% of the money in circulation from the cash-driven economy, causing long queues outside ATM kiosks and banks.
The shortage at ATMs had eased in January with the government pumping new 500- and 2,000-rupee notes into the system.
But the replenishment at ATMs is still not adequate and is falling short by 30%, according to the Cash Logistics Association. The country has more than 200,000 ATMs.
Cash logistics companies such as SIS Prosegur and CMS are hired by banks to ship cash and replenish ATMs.
The association said banks supply adequate cash for ATMs during the beginning of the month, when salaries are being paid. After that, the supply thins.
The reason attributed to the inadequate supply is the banks’ tendency to ensure enough cash for their customers at their branches.
Sources said banks want to keep more money at their branches as the Reserve Bank of India (RBI) has lifted restrictions on cash withdrawals from savings accounts.
Besides, many customers have switched back from online payment modes to cash transactions.
“We have received complaints of ATMs going dry from several places. The fact is that only 65% replenishment is being undertaken, there is still not enough cash for adequate refilling of ATMs and we are struggling,” NSG Rao, the secretary of Cash Logistics Association said.
A State Bank of India report had indicated that the remonetisation exercise would be completed by mid-April. But it also suggested the RBI need not print notes worth Rs 1.17 trillion because of a decline in cash usage.
“Cash transactions and withdrawal declined considerably after demonetisation. But the use of cash is back in circulation, and increasing. This is causing a shortage as the remonetisation exercise is yet to be completed,” said a senior bank executive, who did not wish to be identified.
The RBI did not respond to HT’s efforts for its remarks.
The association said 500-rupee notes are more in demand, than the Rs 2,000.
First Published: Apr 12, 2017 07:10 IST