Cash above pre-DeMo level, yet ATMs run dry

The currency in circulation touched Rs 18.42 lakh crore on April 6, 2018, higher than Rs 17.97 lakh crore it was just before demonetization on November 8, 2016, according to the latest figures by Reserve Bank of India (RBI).

The demand has risen far in excess of supply and digital transactions have not been able to keep pace. RBI reassured that printing in all its four currency printing presses have been stepped up.

"In the first 13 days of the current month, the currency supply increased by Rs 45,000 crore," the finance ministry said in a circular.

To meet the unprecedented demand, the government is planning to step up supply of cash in the banking system. RBI, which used to print Rs 500 crore to Rs 2,500 crore worth of 500-rupee notes every day, will now be printing Rs 7,000 to Rs 7,500 crore to meet the rising demand.

The fivefold jump in printing Rs 500 notes comes after economic affairs secretary Subhash Chandra Garg said that the government suspects that Rs 2,000 notes are being hoarded as they are not coming back into the circulation fast enough.

Executives of ATM management services said cash crunch is an issue with ATMs, hitting different states in different times. Describing it as a new phenomenon, they have taken up the issue with both banks and regulators. Senior ATM executives said only 30% of the demand is being met by the banks. But bankers said that the cash crunch is only an artificially created situation.

"Punjab has seen cash crunch ever since demonetization whereas the states in the Northeast have been feeling the pinch over the last four to five months only. One of the latest reasons for the shortage could be the conversion of Rs 2,000 cassettes to Rs 200 ones, and emphasis has been on printing lower denomination notes. The cash carrying capacity of the ATMs has gone down in terms of value. Over long weekends clubbed together with holidays, ATMs tend to run dry," said Radha Rama Dorai, managing director, ATM & allied services, FIS.

"There are certain pockets, like Telangana and parts of eastern UP where cash offtake has gone up due to seasonal reasons," said a chief executive of a public sector bank.

"Refilling the ATMs on Sundays or holidays is difficult since banks are closed. The cash crunch situation has been ongoing since demonetization. It's been discussed at an industry level with banks as well as the regulator," Radha said.

Navroze Dastur, MD, NCR Corporation said, "The currency in circulation has only reached the pre-demonetization levels. In the meantime, demand has risen in a growing economy. It was expected that digital transactions would step up to meet the demand but that has not happened. All the ATMs in the country have been recalibrated.

"ATM service providers do a daily calculation of the cash required, which is sent to banks in the night for the next day. Till March end, the 90% daily demand was being met, irrespective of public or private banks. However, it has reduced since the first week of April. It has fallen drastically in the past week, now only 30% requirement is met by PSU banks," said V Balasubramanian, spokesperson of Confederation of ATM Industry.

SBI Chairman Rajnish Kumar told PTI that the bank is trying to pump in currency in areas where shortage was witnessed.

"There is no need for concern, wherever there is a deficit, the bank is taking adequate measures," he said, adding overall cash in the economy is more than the demonetization days.

RBI said, "The shortage may be felt in some pockets largely due to logistical issues of replenishing ATMs frequently and the recalibration of ATMs being still underway. Printing of the notes has been ramped up in all the four note presses. 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 is clarified at the outset that there is sufficient cash in the RBI vaults and currency chests."

Finance minister Arun Jaitley said in a tweet, "Have reviewed the currency situation in the country. Overall, there is more than adequate currency in circulation and also available with the banks. The temporary shortage caused by 'sudden and unusual increase' in some areas is being tackled quickly."

WHAT ATM FIRMS SAY

• The conversion of Rs 2,000 cassettes to Rs 200 leading to crunch
   
• Emphasis has been on printing lower denomination notes
   
• The cash carrying capacity of the ATMs has gone down in terms of value
   
• Over long weekends clubbed together with holidays, ATMs tend to run dry