Why cash crunch in ATMs

Lloyd Doyle
April 19, 2018

Another reason for the cash shortage is that payments to farmers have gone up during the ongoing crop-purchase season, Mr Rajnish Kumar, chairman of the State Bank of India, the country's largest lender, told Asian News International. Some ATMs are still being retrofitted to take the new 200-, 500- and 2,000-rupee notes that replaced the banned cash, and that may have contributed to the current shortage.

Speaking to this daily, a senior official of a small public sector bank said that the supply of currency from the Reserve Bank of India (RBI) has decreased and it is worrying banks, which depend on the State Bank of India (SBI) currency chest for cash.

On the other hand, the RBI said logistics and recalibration issues were limiting replenishments of ATMs, media reports said.

Further, "as a matter of abundant precaution, RBI is also taking steps to move currency to areas, which are witnessing unusually large cash withdrawals", it added. The latter does not change hands often since return change is usually a problem so it tends to get hoarded involuntarily thus impacting currency circulation.

"So, in a month, we will be printing about Rs 75,000 crore".

The Government further assured that there have been adequate supply of currency notes which have met entire demand so far. Usually, RBI gives an order for printing after which the CNP, a unit of Security Printing and Minting Corporation of India, starts printing, he said, adding the government-run mint is awaiting central bank's orders to start printing.

Clearly, the government was caught napping as the indications of the approaching crisis were available in Telangana, Andhra Pradesh and other States a few months ago while cash withdrawals were unusually high in Bihar, Maharashtra, Karnataka, Uttar Pradesh and Rajasthan.

An SBI Ecowrap report authored by Chief Economist Soumya Kanti Ghosh said that currency in circulation in the economy had reached Rs 18.29 lakh crore by March 2018, surpassing its pre-demonetisation level of Rs 17.98 lakh crore. "RBI is closely monitoring both these aspects", it said.

Kokar homemaker Suman Jha said she used a cheque to withdraw money from her Canara Bank account on HB Road.

SBI or State Bank of India on Wednesday said availability of cash in its network of ATMs has improved in the past 24 hours. Regarding ATM's going dry; the bank officials attributed the blame on shortage of currency.

"The banks have been asked to replenish 80% of ATMs with cash by tomorrow". Before undertaking a five-fold increase in the production of Rs 500 notes, currency managers ought to have anticipated the likelihood of disruption.

Other reports by Iphone Fresh

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